CUT FROM A
DIFFERENT CLOTH
ANNUAL REPORT &
ACCOUNTS 2017/2018
a look behind the seams
CUT FROM A
DIFFERENT CLOTH
ANNUAL REPORT &
ACCOUNTS 2017/2018
a look behind the seams
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this document, including any information as to the Group’s strategy, plans or future financial or operating performance, constitutes ‘‘forward-
looking statements’’. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms ‘‘believes’’, ‘‘estimates’’, ‘‘anticipates’’,
‘‘projects’’, ‘‘expects’’, ‘‘intends’’, ‘‘aims’’, ‘‘plans’’, ‘‘predicts’’, ‘‘may’’, ‘‘will’’, ‘‘seeks’’, ‘‘could’’, ‘‘targets’’, ‘‘assumes’’, ‘‘positioned’’ or ‘‘should’’ or, in each case, their negative or
other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include
all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current
expectations of the Directors concerning, among other things, the Group’s results of operations, financial condition, prospects, growth, strategies and the industries in which
the Group operates.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future or are beyond the Group’s control. Forward-looking statements are not guarantees of future performance. Even if the Group’s actual results of operations, financial
condition and the development of the industries in which the Group operates are consistent with the forward-looking statements contained in this document, those results or
developments may not be indicative of results or developments in subsequent periods. Accordingly, undue reliance should not be placed on these statements.
The forward-looking statements contained in this document speak only as of the date of this document. The Group and its Directors expressly disclaim any obligation or
undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by
applicable law, the AIM Rules for Companies or the Disclosure and Transparency Rules.
Note: The financial information contained in this document, including the financial information presented in a number of tables in this document, has been rounded to the
nearest whole number or the nearest decimal place. Therefore, the actual arithmetic total of the numbers in a column or row in a certain table may not conform exactly to the
total figures given for that column or row. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information
prior to rounding, and accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.
C O N T E N TS
HIGHLIGHTS
CHAPTER 1 - STRATEGIC REPORT
Chairman’s Statement
Chief Executive’s Strategic Report
Financial Review
Principal Risks and Uncertainties
Social Responsibility
CHAPTER 2 - CORPORATE GOVERNANCE
Board of Directors
Governance Framework
Audit Committee Report
Nomination Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
CHAPTER 3 - CONSOLIDATED FINANCIAL STATEMENTS
Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Company Information
C O N T E N TS 5
4 - 5
10 - 11
12 - 19
20 - 23
24 - 25
26 - 31
34
35 - 37
38 - 39
40
41 - 49
50 - 51
52
57 - 60
62
62
63
64
65
66 - 90
92
93
94 - 96
97
Company Secretary:
Jonathan William Dargie
Registered Office:
Joules Building, The Point, Rockingham Road, Market Harborough, Leicestershire, LE16 7QU
Nominated Adviser:
Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET
Broker:
Liberum Capital Limited, Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY
Corporate PR:
Hudson Sandler, 25 Charterhouse Square, London, EC1M 6AE
Legal Advisors:
Eversheds LLP, 115 Colmore Row, Birmingham, B3 3AL
Auditor:
Registrars:
Deloitte LLP, 1 Woodborough Road, Nottingham, NG1 3FG
Equiniti Limited, Aspect House, Spencer Road, Lancing, BN99 6DA
Joules Group plc - Registered in England and Wales number: 10164829. Website - www.joulesgroup.com
6 H I G H L I G H TS
H I G H L I G H TS 7
H I G H L I G H TS
•
•
Revenue increased by 18.4% to £185.9 million -
up 18.8% in constant currency to £186.0 million
Underlying1 Profit Before Tax increased by 28.5%
to £13.0 million
•
Statutory PBT increased by 25.6% to £11.2 million
•
Underlying EBITDA2 increased by 24.4% to £21.1 million
•
•
•
•
•
Underlying basic EPS increased by 28.5% to 11.8 pence,
with Statutory basic EPS up by 36% to 9.9 pence
Gross margin increased by 25 basis points to 55.7%
Active3 customers increased by 23.4% to 1.15 million
International revenue increased by 35.7% (40.4% constant
currency) - now representing 13.1% of Group revenue
Final dividend of 1.3 pence per share proposed
1. Underlying excludes exceptional items, primarily related to the costs of admission to
AIM and the expense of share based compensation awards introduced following the IPO.
2. EBITDA is a non-GAAP measure, a reconciliation to operating profit is provided in the
Financial Review.
3. Active customer is a customer registered on our database who has made a transaction in
the last 12 months.
Reconciliation to statutory profit before tax:
£M IL LION
FY 18
FY 17
Underlying profit before tax
IPO transaction costs
Share based compensation
Statutory profit before tax
13.0
-
(1.8)
11.2
10.1
(0.3)
(0.8)
8.9
8 O U R V I S I O N
O U R V I S I O N 9
O U R V I S I O N
CONTEMPORARY COUNTRY LOVING
We celebrate our rural roots by designing clothing, accessories
and homeware for today’s family lifestyle.
INSPIRED BY
NATURE
We take inspiration from all
of the flora and fauna that can be
found in the countryside and along
the coasts of Britain.
RESPECT THE
ENVIRONMENT
As a brand that was established
in the countryside, we see it
as our responsibility to look after
the world around us.
CONNECT WITH LIFE’S
HAPPY FEELINGS
Life is busy. We want to
slow down, stop and take
pleasure in the simple things
that make us happy.
CLOTHES TO ENABLE
YOUR LIFESTYLE
We blend style with practicality
to create collections that are
built to last.
COLOUR AND PRINT
Our Print Team are experts in colour.
All of our prints are hand-drawn or
hand-painted in-house, and the unique
way we use colour and print makes us
stand out from the crowd.
CAPTURING THE SEASONS
Spring, summer, autumn
and winter. In Britain we’re
lucky to have four very different
seasons. We always look to them
for inspiration.
FUN
Our upbeat and positive outlook
on life can be seen in everything
we do – from the way we use
colour and print to our tone of
voice and packaging.
ATTENTION TO DETAIL
Our designs capture not only
the eye but the imagination.
Hidden details are set to surprise
and delight people of all ages.
QUALITY
It can be seen in the way we
work and felt in what we create.
1C H A P T E R
STR ATEGIC REP ORT
earning our stripes
A CL ASSIC WITH A TWIST
Our much-loved Harbour Top first burst onto the scene in 2006. Inspired by the classic
Breton – it quickly became a best-seller. Since then we’ve added twists to the traditional
navy stripes by adding eye-catching colours, hand-painted prints and embroidery detail.
C H A I R M A N ’S STAT E M E N T 13
C H A I R M A N ’S STAT E M E N T
J O U L E S G R O U P P LC
INTRODUCTION
I am very pleased to update the Group’s stakeholders
on what has been another outstanding year of progress.
We have continued to expand Joules as a premium lifestyle
brand across distribution channels, product categories and
geographic markets and, I am delighted to say, delivered a
profit performance for the year that exceeded the Board’s
initial expectations.
Group revenues increased by 18.4% year on year, reflecting
strong growth across both our Retail and Wholesale
segments. This momentum, in combination with improved
Group gross margin and disciplined cost management, has
resulted in a 28.5% increase in underlying profit before tax
with statutory profit before tax up 25.6%. This very pleasing
outcome reflects the strength and appeal of the Joules brand
and the quality of product offering as well as our loyal and
growing customer base.
STRATEGIC PROGRESS
The Group has a clear growth strategy which Colin Porter
expands upon in the Chief Executive’s review of this Annual
Report. This focused strategy is built on four key pillars:
increasing customer value; expanding brand sales in the UK
market through appropriate channels; developing the brand
in targeted international markets, primarily the US and
Germany; and expanding the product range into new areas
that are appropriate for Joules.
At the core of this growth strategy, and indeed everything
we do, is our much-loved and special brand. The Joules
brand is strong, distinctive and offers a unique product
proposition that supports our customers’ lifestyles. We
continue to nurture and develop the brand by ensuring that
our entire proposition continually meets and exceeds our
loyal customers’ expectations for the quality and values that
collectively make Joules stand out from the crowd.
The Group’s resolute attention to carefully nurturing the brand
has never been more important. The retail landscape is changing
globally as technology provides customers with new ways to buy
their favourite products. We are investing in and developing
the channels through which we engage with our customers to
ensure that their experience is as great online, on social media
or through one of our partners as it is in our own stores.
FINANCIAL RESULTS & DIVIDEND
Group revenue of £185.9 million increased by 18.4%
compared to the prior period (FY17: £157.0m). This reflects
strong growth in both the Retail and Wholesale segments.
Joules delivered growth across all product categories with a
strong performance in the core Womenswear category – with
outerwear, dresses and tops continuing to prove particularly
popular with our customers. Further development of our
Accessories, Footwear and Childrenswear categories also
contributed to the strong revenue growth.
Underlying profit before tax increased by 28.5%, and basic
underlying EPS was 11.8 pence per share (FY17: 9.2 pence).
Statutory profit before tax increased by 25.6% and statutory
EPS was 9.9 pence per share (FY17: 7.2 pence).
The Board has proposed a final dividend of 1.3 pence per share,
which, if approved at the shareholders AGM, will take the
dividend for the full year to 2.0 pence per share (FY17: 1.8 pence).
The Strategic Report and Financial Review that follow
provide a more in-depth analysis of the trading performance
and financial results of the Group.
BOARD CHANGES
As announced on 18 May 2018, I will step down as Non-
Executive Chairman of Joules on 31 July 2018 having
completed more than five years in the role. It has been
a great pleasure to Chair the Joules Board throughout a
period of such strong growth and transformation, including
our successful IPO in 2016. I am confident that Joules is
in a tremendous position to continue to deliver its growth
strategy and look forward to following the brand’s journey
as it goes from strength to strength.
The Group has identified and secured a fantastic replacement
Non-Executive Chairman in Ian Filby. Ian has extensive
public company and retail experience and I am sure he will
contribute a huge amount to the Board over the coming years.
OUR TEAM
The creativity, energy and talent of our entire team remains
critical to driving the business forward. I would like to take
this opportunity to thank all colleagues across the world for
their outstanding efforts throughout the year, and indeed
throughout my entire time with Joules. The passion and
dedication of our team, from management in head office
through to our stores and those in other markets, creates
a true competitive advantage for our business.
OUTLOOK
The brand has strong momentum and we have seen good
growth in the first few weeks of our new financial year with
positive early feedback on our Spring/Summer 2019 ranges
from our wholesale customers.
The challenges facing the wider UK retail sector are
well documented. The shift towards online shopping in
combination with sector discounting, cost and consumer
spending pressures is making life incredibly challenging for
some retail businesses.
However, Joules is a distinctive brand with a strong
connection with its customers and we have a flexible
business model and multiple routes to market supported
by a well invested infrastructure and a committed and
enterprising team. I therefore believe that Joules remains
very well positioned to continue to grow and flourish in the
UK and internationally despite the uncertain and changing
nature of the retail sector.
On a geographic basis, UK sales increased 16.2% and
international sales increased 40.4% on a constant currency
basis, now representing 13.1% of Group revenue (FY17: 11.5%).
NEIL MCCAUSLAND
Chairman
14 C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
B U S I N E SS M O D E L
CHIEF EXECUTIVE’S STRATEGIC REPORT
I am very pleased with the strategic progress achieved by
the Group in FY18 as the brand continued to grow across
distribution channels and product categories both in the UK
and internationally. Our performance continues to reflect
the strength of the Joules brand, the appeal of our products
and our flexible multi-channel business model.
THE JOULES BRAND
Joules is a brand with authentic heritage and strong brand
values that underpin the Group’s exciting growth potential.
Ever since Tom Joule established the brand nearly three
decades ago, Joules has been committed to surprising and
delighting its growing community of customers with a sense
of fun and quirky Britishness.
Maintaining and developing a strong brand that has real
affinity and connection with its customers has never been
more important than when market conditions are challenging
across the retail sector. During the year, we have taken steps
to invest further in the development of the Joules brand to
reinforce what it stands for and ensure consistency of how it
is conveyed across all customer touch points.
“Contemporary country loving” is at the heart of the Joules
brand and provides the vision we all work towards. Our
in-house creative team take inspiration from nature and the
changing British seasons to design clothing that enables our
customers’ lifestyles, come rain or shine. We stand out with
our unique use of colour and print – all of which are hand
drawn by our in-house team – as well as unexpected details.
The Joules brand is all about connecting with life’s happy
feelings and embracing quality time, doing the things we
love with the people who matter.
We were pleased that the brand’s continued success
was recognised at the 2017 Drapers Awards where the
business won Fashion Retail Business of the Year (between
£101m-£500m turnover), as well as at this year’s Retail
Week Awards, where Joules received a Mark of Excellence
within The Best Fashion Retailer category, demonstrating
an industry-wide recognition of our distinctive brand,
quality products and outstanding customer engagement.
What’s most important is what our customers say about our
brand, so we are very proud of our 9.3/10 Trust Pilot rating
from more than 2,000 customer reviews.
OUR BUSINESS MODEL – A TRULY MULTI-CHANNEL
LIFESTYLE BRAND
Joules was established as a multi-channel brand with a
vision of being available to our customers whenever and
wherever they choose to spend their time. We distribute
the brand through what we call our “Total Retail” platform.
A platform that provides a fully Joules-branded customer
experience across our portfolio of stores and concessions;
our fast-growing e-commerce platform; country shows and
events; and, more recently, across a range of selected online
marketplaces.
In addition, and to further support our goal of ensuring the
brand is present wherever our customers spend their time,
we have a large network of wholesale customers in the UK
and internationally. The Joules brand is also increasingly
available through the retail channels of our brand licence
partners.
This flexible and adaptable approach to distributing the
brand enables our customers to engage with Joules in a
way, and at a time, that works for them, and means that the
Group is not reliant on any single route to market. This is
reflected in the Group’s balanced revenue mix across these
complementary distribution channels.
16 C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T 17
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
ST R AT E G Y
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
ST R AT E G I C P R I O R I T I E S A N D D E V E LO P M E N TS
INCREASING CUSTOMER VALUE
• Active customer numbers passed one million in the year
with continued growth in new customers and increased
retention and reactivation of the existing base
• 17 customer events held in stores through the year
• Trust Pilot rating 9.3/10 – over 2,000 responses
• Over 475,000 Facebook followers and over 160,000
Instagram followers with high levels of monthly
engagement
INTERNATIONAL EXTENSION
• In the US, Dillard’s department store launched Joules
Womenswear in 100 stores from Spring/Summer 2018
• Completed transition of US independent stockist accounts
from third-party distributor to in-house management
• Germany wholesale continues to grow through
independent accounts
• Dedicated US and German websites delivered very strong
e-commerce sales growth with increased marketing support
• Significantly improved international wholesale Gross margin
DRIVE TOTAL UK BRAND SALES
• E-commerce now over 38% of retail sales
• 15 net new stores opened during the period
• Six stores relocated
• John Lewis womenswear to be converted from wholesale
to retail-concession model for the Autumn/Winter 2018
season
• Continued strong wholesale growth within both larger
and independent accounts
• Strong growth in Spring/Summer 2018 order book
PRODUCT EXTENSION
• Launch of Joules sofa collections in partnership with
DFS. Extended from initial 10 DFS stores to 40 stores
and online
• New colourful umbrella range launched in partnership
with Fulton
• Continued expansion of women’s footwear category and
product development within childrenswear and accessories
• Licensing revenue growth of 82%
OUR GROWTH STRATEGY
We have a clear strategy for the long-term development of Joules as a premium lifestyle brand, both in the UK and
internationally. This strategy is built on the following key pillars and is continuously underpinned by our distinctive brand,
unique products and unwavering customer focus. This strategy is delivered by our exceptional team of people and supported
by well-invested systems and infrastructure.
1. INCREASING CUSTOMER VALUE - For Joules, ‘Customer Value’ means increasing our base of active customers and their
frequency of interaction with and spend with the brand. Our goal is for customers who are actively engaging with and
amplifying our brand, to ultimately choose to allocate more of their clothing, footwear and accessories spend on our
unique Joules products. This is achieved through delivering relevant, consistent and increasingly tailored, cross-channel
experiences and communications, for both new and existing customers.
2. DRIVE TOTAL UK BRAND SALES - As a multi-channel brand, we seek to grow total UK brand sales within our target
customer segments by increasing the availability and accessibility of our products across existing and emerging distribution
channels. Our goal is to make it easy for our customers to discover, be inspired by, purchase, receive and, if necessary,
return or exchange, our products. We achieve this by being located where our customers choose to spend their time.
Our priorities are:
TOTAL RETAIL
Our Joules branded retail proposition spans stores & concessions, e-commerce and online marketplaces. The in-store and
e-commerce proposition are increasingly converging and the development of these channels as part of an integrated and
consistent, customer focused, proposition is central to our growth strategy and reflected in our infrastructure investments.
– E-COMMERCE: is a fast-growing and evolving channel. We expect to continue to increase the mix of e-commerce
sales as a proportion of our total retail sales through ongoing enhancements to our e-commerce platform, the
customer proposition and our customer relationship management capability.
– STORES & CONCESSIONS: there is further potential for the brand to increase its physical retail space in the
UK and ROI. This will be achieved through opening new stores in attractive locations, opening concessions with
carefully selected partners, and selected relocations of existing stores to larger sites that better reflect our brand
and product range. Concession openings can include the conversion of existing wholesale accounts where there is an
opportunity to improve the brand presence and customer experience.
– MARKETPLACES: we will leverage our wholesale capabilities and relationships to support emerging new retail
channels such as online marketplaces and ‘fulfilled by’ models that offer new routes to reach our target customer
base in the UK and internationally.
WHOLESALE
We broaden the reach of the Joules brand through selected wholesale partners that are closely aligned with our brand
values and product categories - including specialist independents, department stores and online retailers.
3. INTERNATIONAL EXPANSION - The Joules brand and products resonate well in international markets. We develop
international markets via a wholesale model supported by e-commerce, leveraging our investment in our central creative
and design functions, supply chain and infrastructure. Our priority markets are the US and Germany, where our brand and
products are resonating well with our growing customer following.
4. PRODUCT EXTENSION - The Joules product offer extends to meet many of the lifestyle needs of our customers. Joules has
had success extending the product offer within existing categories and into new categories; we will continue to expand into
new product categories that are appropriate for the development of the Joules brand both organically and by working with
carefully selected licence partners.
18 C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T 19
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
K E Y P E R F O R M A N C E I N D I C ATO R S
OUR FINANCIAL KPIS
Our financial KPIs are:
• Revenue by channel - delivering balanced growth across our core-sales channels
• Group Gross margin - maintaining overall product level profitability whilst developing the different channels to market
• Underlying EBITDA margin – how we are effectively leveraging our cost base and infrastructure
• Return on Capital Employed (‘ROCE’) – how we are managing working capital and growth capital investments
KEY PERFORMANCE INDICATORS
Our KPIs have been selected based on their link to the successful delivery of our strategy. They are monitored
by the Board on a regular basis.
FINANCIAL KPIS
STRATEGIC KPIS
NUMBER OF STORES
TOTAL SELLING SPACE (SQ FT)
FY14
FY15
FY16
FY17
FY18
80
FY14
84,500
91
FY15
100,000
97
FY16
111,000
108
FY17
135,100
123
FY18
163,400
INTERNATIONAL AS % OF TOTAL REVENUE
ACTIVE CUSTOMER NUMBERS 1
REVENUE BY CHANNEL 3 £M
GROUP GROSS MARGIN
18 0
16 0
14 0
12 0
10 0
80
60
40
20
0
26 .9
23 .9
39 .3
55 .5
49 .8
44 .7
38 .9
37 .2
30 .1
31 .6
25 .8
52 .4
58 .2
68 .3
75 .0
56 .0
55 .5
55 .0
54 .5
54 .0
53 .5
53 .0
52 .5
52 .0
55 .0%
55. 4%
55. 7%
53 .3%
53. 5%
FY14
FY152
FY16
FY17
FY18
FY14
FY152
FY16
FY17
FY18
STORES & CONCESSIONS
E-COMMERCE
WHOLESALE
UNDERLYING EBITDA MARGIN
ROCE 4 %
11 .3%
10 .8%
10 .3%
11 .0
10 .5
10 .0
9.5
9.0
8.5
8.0
9.5 %
9.0 %
35
30
25
20
15
10
5
30 .0%
27 .3%
32 .5% 32. 2% 31. 5%
FY14
5.8%
FY14
529,000
FY14
FY152
FY16
FY17
FY18
FY14
FY152
FY16
FY17
FY18
FY15
FY16
FY17
FY18
9.1%
FY15
621,000
10.1%
FY16
824,000
11.5%
FY17
931,000
13.1%
FY18
1,149,000
1Active customer defined as a customer who is registered on our database and has transacted within the last 12 months.
2FY15 was a 53-week period.
3Revenue by Channel excludes Shows and Licensing.
4Return on Capital employed (‘ROCE’) is calculated as Underlying Operating Profit after Tax divided by Average Capital employed
(Capital employed defined as Underlying Net Assets adjusted for excess cash balances). FY14, FY15 and FY16 restated for consistency.
20 C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T
B U S I N E SS R E V I E W
RETAIL: MULTI-CHANNEL PROGRESS
Retail revenue, which includes stores and concessions,
e-commerce and shows, continued to increase impressively,
up by 15.9% during the year to £129.7 million (FY17:
£111.9m). This reflected growth from stores and very strong
e-commerce growth, with e-commerce revenue increasing
by 28.0% to represent 38.4% of total retail revenue (FY17:
34.8%).
The Group’s store coverage across the UK and ROI
increased to 123 stores at the end of the Period (FY17: 108
stores), with 17 new openings and two closures (15 net
new stores). We also relocated six stores in the year (FY17:
3), typically this was to larger sites that better reflect our
brand and product range. This expansion increased our
total selling space to 163,400 square feet (FY17: 135,100
square feet) at the Period end. The average payback on
new stores, opened for more than one year, continues to be
well within our appraisal threshold of 24 months, and all
but two of our stores deliver a positive profit contribution,
with plans in place to achieve positive contribution in the
two marginally negative contribution stores.
The new openings were spread across our different store
location types reflecting the breadth of appeal of the Joules
brand, including:
• Lifestyle - Abersoch, Ambleside, Holt (2nd store), Salcombe
(2nd store), Lyme Regis, St Ives (2nd store), Alnwick;
• Local - Nantwich;
• High Street - Bracknell, Ipswich, Perth, Salisbury;
• Metro - Oxford, Peterborough, Southampton;
• Regional Shopping Centre - Rushden Lakes;
• Premium Outlet - Gloucester Quays.
Our UK store presence continues to play an important role
in building brand awareness and driving new customer
acquisition and retention. In FY19, we anticipate opening
29 concessions, as we transition our existing wholesale
partnership with John Lewis to a retail concession model
for the womenswear category, and around six new stores.
E-commerce continued to achieve strong growth, increasing
by 28.0% to represent 38.4% of total retail sales (FY17:
34.8%). We have continued to invest in our e-commerce
platform including enhancements to digital content,
payment and delivery propositions, as well as in targeted
customer marketing which has helped us to grow visitor
numbers and improve conversion rates. Mobile is now the
most important e-commerce channel for our customers,
with traffic from a mobile device (including tablets)
representing around three quarters of total traffic.
Our ‘Total Retail’ approach allows us to adapt to meet
evolving customer expectations and behaviours – this
includes offering an increasingly seamless in-store/online
experience including services such as Click & Collect and
Order-in-Store fulfilment options, seamless in-store returns
and exchanges for e-commerce orders and consistent cross-
channel communications and promotions.
WHOLESALE: UK AND INTERNATIONAL EXPANSION
Wholesale continued to deliver strong revenue growth, up
by 24.1% year on year to £55.5 million (FY17: £44.7m). This
reflects the differentiation and appeal of the Joules brand
amongst wholesale customers both in the UK and our target
international markets of the US and Germany.
In the UK, we continued to see good growth in both our
‘house account’ channel (which consists of multi-site
retailers and large online players) and from the ‘field
account’ channel where we have over 500 independent
stockists. The house account channel saw growth with
existing customers and from new customers as we continue
to develop new partnerships across lifestyle sectors.
During FY19 our existing wholesale activity with John
Lewis womenswear and with Next Label will be transitioned
to the retail concession model.
INTERNATIONAL
Total international sales increased by 40.4% (in constant
currency) to £24.6 million (FY17: £17.5m), now representing
13.1% of total Group revenue (FY17: 11.5%). Strong
international wholesale growth was supported by good
performance in our international e-commerce activity where
an increase in digital marketing drove strong revenue
growth across both our US and German websites.
In the US, we continued to progress with our proven
expansion strategy, which consists of extending both our
brand presence with new wholesale partners as well as
expanding our category penetration and developing new
categories with existing partners. During the year we
expanded our presence in leading department stores with
Nordstrom increasing the range of Joules products in response
to their customers’ appetite and demand for the brand. In
addition, Dillard’s launched Joules womenswear across 100 of
their stores for the Spring/Summer 2018 season following the
launch of childrenswear in Dillard’s in the Autumn/Winter
2016 season. We are pleased with the customer reactions and
the brand’s momentum so far and we see significant further
potential for Joules across the US market.
During the year, we also took the important step of bringing
the management of our US independent stockist accounts
in-house, to be managed by our New York-based sales
and marketing team rather than through a third-party
distributor. The transition completed in the second half
of the year and we anticipate future benefits of having full
control over the long-term growth of the brand within the US.
In Germany we continued to perform in line with
expectations and have good momentum, particularly within
the independent stockist channels.
DEVELOPMENT AS A LIFESTYLE BRAND
Joules delivered sales growth across all product categories
with a particularly good performance in the core
Womenswear category – outerwear. This includes our
colourful “Right as Rain” ranges, which proved particularly
popular with our customers as did our core jersey top ranges.
Our famous, colourful and functional wellington boots
ranges continued to be well received by our customers,
whilst our broader footwear range was also expanded in
the year, following positive customer feedback and demand,
with our Chelsea Boot range featuring new colourways and
embroidered styles, as well as a new slipper collection and
expanded summer sandal range.
Our accessories offer continued to develop in the year, with
notable successes including handbags, purses and hats.
We will continue to expand our product offer into core
categories where the brand is relevant to our customer base.
In the year we saw developments within women’s nightwear
and knitwear and in our baby category with an increased
range of baby outfits, hats and socks.
We will also build the brand through entering new product
categories that are relevant to our customers’ lifestyles
by partnering, typically on a licence basis, with carefully
selected businesses that align with Joules’ values. In
December 2017 we launched the Joules sofa range in
partnership with DFS. Working closely with DFS, we created
four sofa collections, all of which showcase elements of
Joules’ unique prints, design features and colour. Following
a positive customer response to the range in the initial 10
stores, the collections were rolled out to 40 DFS stores and
online via the DFS website.
We also expanded the brand through a partnership with
Fulton for Joules umbrellas and further expanded the
Joules-branded toiletries and gift range in Boots.
CUSTOMER COMMUNITY
Joules has a loyal and highly engaged customer community.
Active customers - customers registered on our database
who have purchased in the last twelve months increased by
23.4% over the year, to stand at 1.15 million (FY17: 931,000).
This growth was supported by effective new customer
acquisition activity, both in-store and through primarily
digital marketing, as well as improved retention of existing
customers. Our average customer acquisition cost remained
in line with the prior year.
Our customers engage with, and amplify, our distinctive
brand across their social media platforms. Our Facebook
and Instagram followers both increased in the year - to more
than 475,000 and 160,000 followers respectively with both
platforms having high levels of monthly engagement.
We ran several brand relevant campaigns during the
year including a ‘Design a Lunchbox’ competition, which
was launched during the September back to school period
and gave our customers the opportunity to win a family
holiday. The winning print was also applied to product that
was available to buy online. Our social media and digital
campaigns have also worked well internationally.
C H I E F E X E C U T I V E ’S ST R AT E G I C R E P O R T 21
In the US our launch of womenswear at Dillard’s department
stores was supported by a range of social media activity
including a “win a Joules Mini” competition, that reached
nearly 300,000 people.
The year also saw us increasing our focus to ‘surprise and
delight’ our most valuable customers including exclusive
offers and invitations to in-store events, such as our very
successful Christmas wreath making evenings.
INVESTING IN LONG TERM GROWTH
The Group’s strategy and focus is aimed towards the long
term and sustainable development of the Joules brand. We
continue to invest in our e-commerce proposition, stores,
infrastructure, systems and people to deliver this.
In the second half of the year, we completed the
implementation and migration to our new group-wide
ERP system, Microsoft Dynamics AX. We anticipate that,
following a period of transition, this investment will bring
benefits including enhanced stock management across
channels, process efficiencies and simplification of the IT
environment over the coming years.
At the beginning of the financial year we acquired the
freehold for a new head office premises located very close
to our existing head office in Market Harborough. The site
includes an existing office building and development land
to support future growth. The design phase for the new
head office facility is now complete and we anticipate that
work will start on the development early in the second half
of FY19. This important investment will further strengthen
our brand values and culture and create a more flexible,
modern working environment for our head office teams.
PEOPLE
The creativity, skill and commitment of the Joules team are
key to the brand’s continued success and I would like to take
this opportunity to thank all colleagues across the Group for
their hard work throughout the year.
We remain committed to investing in the skills and
development of our people across the business, with the aim
of making our customers’ experiences with Joules the very
best they can be.
In May 2018 the Company announced that Neil McCausland
will step down as Non-Executive Chairman of Joules on 31
July 2018 having completed more than five years of service
on the Board. Neil has made a fantastic contribution to
Joules’ development and he leaves the business in great
health and with multiple growth opportunities ahead.
At the same time, we look forward to welcoming Ian Filby
into the role of Non-Executive Chairman from 1 August
2018. Ian is a highly respected retail executive and I am
delighted that he is joining Joules.
COLIN PORTER
Chief Executive Officer
22 F I N A N C I A L R E V I E W
F I N A N C I A L R E V I E W
J O U L E S G R O U P P LC
PROFIT BEFORE TAX – UNDERLYING AND STATUTORY
Underlying profit before tax (‘PBT’) was £13.0 million for
the 52 weeks to 27 May 2018, an increase of 28.5% on the
prior period (FY17: £10.1m). Statutory PBT including
share-based compensation and exceptional IPO transaction
costs was £11.2 million (FY17: £8.9m), an increase of 25.6%.
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
& AMORTISATION - UNDERLYING (‘EBITDA’)
Underlying EBITDA increased by 24.4% to £21.1 million
(FY17: £16.9m) and the underlying EBITDA margin
increased by 55 basis points from 10.8% to 11.3%.
UNDERLYING AND STATUTORY RESULTS
Certain items have been excluded from the underlying
results reported in the front section of this Annual Report.
In the Period these solely relate to non-cash share-based
compensation plan expense. The prior period also included
IPO transaction costs. These adjustments are intended to
provide the reader with a more meaningful year-on-year
comparison.
Executive and employee share-based compensation plans
were established at the time of the IPO, in May 2016. In
accordance with IFRS 2, the non-cash expense related
to awards under the share plans is accounted for within
administrative expenses over the period until the shares
are exercised, typically assumed as three years. The first
awards under these plans were made in FY17 and the
second awards were made in FY18. As the share plan award
cycle matures over the first three years, the related expense
is anticipated to increase each year. At maturity, the annual
share-based compensation charge is anticipated to be
approximately £2.0 million per year on achieving the target
performance, rising to approximately £2.8 million per year
on achieving maximum performance. During this maturity
phase of the new share plans, the expense is treated as
‘non-underlying’.
Further detail on the share plans is contained within the
Director’s Remuneration Report and the Consolidated
Financial Statements. A reconciliation between Underlying
and Statutory (GAAP) results is provided below:
52 WEEKS ENDED 27 MAY 2018
52 WEEKS ENDED 27 MAY 2017
£MILLION
UNDERLYING
SHARE BASED
STATUTORY
UNDERLYING
SHARE BASED
IPO COSTS
STATUTORY
COMPENSATION
COMPENSATION
Revenue
Gross profit
Admin expenses
Operating profit
Net finance costs
Profit before tax
Operating profit
Depreciation &
amortisation
EBITDA
185.9
103.5
(90.2)
13.3
(0.3)
13.0
13.3
7.8
21.1
185.9
103.5
(92.0)
(11.5)
(0.3)
11.2
(1.8)
(1.8)
(1.8)
157.0
87.1
(76.7)
10.3
(0.2)
10.1
10.3
6.6
16.9
(0.8)
(0.8)
(0.3)
(0.3)
(0.8)
(0.3)
157.0
87.1
(77.9)
9.2
(0.2)
8.9
F I N A N C I A L R E V I E W 23
REVENUE
Group revenue increased by 18.4% to £185.9 million from
£157.0 million in FY17 (up 18.8% on a constant currency
basis), with Retail revenue increasing by 15.9% to £129.7m
(FY17: £111.9m) and Wholesale revenue increasing by
24.1% to £55.5m (FY17: £44.7m) (up 25.8% on a constant
currency basis). Sales in international markets, which are
predominantly wholesale, increased by 35.7% (40.4% on a
constant currency basis) and now represent 13.1% of Group
revenues (FY17: 11.5%).
RETAIL - STORES AND CONSESSIONS
Store revenue at £75.0 million increased by 9.8% in the
year. During the year we opened 17 new stores and closed
two stores, resulting in an increase in owned store numbers
from 108 to 123. We also relocated six stores during the
year, to increase selling space or improve location. We had
three franchise stores at the end of FY18 (FY17: 3).
RETAIL – E-COMMERCE
E-commerce revenue at £49.8 million increased by 28.0%
and represented 38.4% of total Retail revenue (FY17:
34.8%). The e-commerce channel continued to benefit from
higher visitor numbers and improved conversion which was
supported by our ongoing new customer acquisition and
retention activity as well as enhancements to the customer
experience and e-commerce platform.
WHOLESALE
Wholesale revenue at £55.5 million increased by 24.1%
(25.8% on a constant currency basis). Good revenue
growth was seen in the UK and in international markets
and across both larger ‘house account’ and smaller ‘field
account’ customers. For independent stockists in the US, we
successfully completed the transition from the third-party
distributor to an in-house distribution model during the
second half of the Period.
LICENSING
Although still a relatively small contribution to Group
revenue, revenue from licensing activity increased by
81.7% in the year to £0.7 million. The increase follows the
successful launch of the Joules sofa range in partnership
with DFS and an increased focus on existing brand licence
partnerships that include toiletries, bedding and eyewear.
GROSS MARGIN
Gross margin at 55.7% was 25 basis points higher than
the prior year. The Retail segment gross margin improved
by 40 basis points, despite a challenging UK retail sector
environment, as a result of a disciplined approach to
promotional activity and our strong product offering. Gross
margin in the Wholesale segment improved by 90 basis
points with improvements in the US wholesale channel more
than offsetting its dilutive impact to the overall segment
and Group Gross margin. US gross margins benefited
from a favourable product mix, with a higher proportion of
clothing sales, and the initial benefit of transitioning the
independent stockist channel to an in-house distribution
model in the second half of the Period.
ADMINISTRATIVE EXPENSES - UNDERLYING
Underlying administrative expenses increased by 17.6%
from £76.7 million to £90.2 million and now represent 48.5%
of revenue (FY17: 48.9%).
Sales & Marketing costs increased by 21.4% in the year
to £13.7 million. During the year we increased marketing
investment to support the growth of our US wholesale
business and to increase customer acquisition and digital
marketing in the UK and our target international markets,
the results of which are reflected in the strong e-commerce
channel performance and our active customer numbers at
the year-end which increased by 23.4% to 1.15 million.
Store costs increased by 22.9% in the year to £30.4 million.
This increase was ahead of the growth of store revenues
reflecting the increases in National Living Wage and the
2017 Business Rates revaluation as well as the higher than
typical number of new store openings and relocations in the
year.
Distribution costs increased by 22.2% in the year to £6.9
million, this increase is in line with volume growth.
Head office costs increased by 10.6% in the year to £31.5
million. We continue to invest in support of the areas of
strategic growth including further expansion of our US
wholesale team and showroom based in New York and
the creative and design teams based at our head office in
the UK. During the year we saw the benefit from historic
investments in head office functions and teams.
Depreciation and amortisation increased to £7.8 million
(FY17: £6.6m), the increase mainly being due to our new
store opening and relocation programme and IT investments
in the current and prior period.
The total rental expense, including service charges, for the
period was £13.4 million (FY17: £11.7m) with the increase
due to new store openings and rent reviews in the Period.
Business rates expense increased from £3.7 million to
£4.8 million in the year reflecting the growth in store
numbers and the impact of the Business Rates revaluation
undertaken at the end of the prior year.
24 F I N A N C I A L R E V I E W
F I N A N C I A L R E V I E W
C O N T I N U E D
F I N A N C I A L R E V I E W 25
ADMINISTRATIVE EXPENSES – NON-UNDERLYING
Non-underlying administrative expenses totalled £1.8
million (FY17: £1.2m). In the year, this all related to
non-cash share-based compensation expense of £1.8
million (FY17: £0.8m). In the prior year, exceptional IPO
transaction costs of £0.3 million were also incurred.
Share-based compensation plans are accounted for in
accordance with IFRS 2, with the total fair value of each
share plan award being amortised to administrative
expenses over the period between grant of the award and
the expected exercise date, typically three years. FY18
includes the expense for the first and second cycle of
the Group’s share plans. The share plans are detailed
more fully in the Directors’ Remuneration Report and
the fair value calculation and annual expense within the
Consolidated Financial Statements.
NET FINANCE COSTS
Net finance costs of £0.3 million (FY17: £0.2m) related to
interest and facility charges on the Group’s revolving credit
facility and term loan with Barclays Bank Plc.
TAXATION
The tax charge for the period was £2.6 million (FY17:
£2.6m). The effective tax rate for the Period was 22.9%
(FY17: 28.8%).
The effective tax rate was higher than the applicable
UK corporation tax rate of 19.8% for the period, due to
the impact of non-deductible expenses including certain
professional fees and non-deductible expenses incurred in
the fit-out and refurbishment of new and relocated stores.
The FY17 effective tax rate was further impacted by non-
deductible fees in relation to the IPO.
EARNINGS PER SHARE
Statutory basic earnings per share for the period were 9.9
pence per share (FY17: 7.2 pence per share). Statutory
diluted earnings per share for the period were 9.7 pence per
share (FY17: 7.2 pence per share).
On an underlying, pro forma basis the FY18 basic earnings
per share were 11.8 pence (FY17: 9.2 pence).
To facilitate meaningful comparison of earnings per share,
earnings are adjusted for the non-underlying items detailed
above, to reflect a consistent tax rate across the periods and
on the basis of a consistent number of shares in issue for the
periods prior to the IPO.
UNDERLYING,
PRO FORMA EPS
PBT – Underlying £m
Tax rate
Tax – underlying £m
Earnings – Underlying £m
Shares (million)
Underlying Basic EPS - Pence
Shares – diluted (million)
Underlying diluted EPS - Pence
FY18
13.0
20%
(2.6)
10.4
87.5
11.8
88.5
11.7
FY17
10.1
20%
(2.0)
8.1
87.5
9.2
88.5
9.1
DIVIDEND
The Board is recommending a final dividend of 1.3 pence
per share in respect of FY18 (FY17: 1.2 pence per share).
This brings the total dividend for FY18 to 2.0 pence per
share (FY17: 1.8 pence per share). Following approval
by shareholders at the AGM on 27 September 2018, the
dividend is expected to be paid on 15 November 2018 to
shareholders on the register at 26 October 2018.
CASH FLOW AND NET CASH / (DEBT)
Free cash flow, excluding expenditure on our new head office
development, was £0.1 million in the Period (FY17: £3.7m).
Growth in the Group’s EBITDA was offset by a higher net
working capital outflow of £5.9 million (FY17: £1.0m outflow)
and higher core capital expenditure of £12.5 million
(FY17: £10.7m) as explained more fully below.
The Group ended the period with net cash of £nil
(FY17: £6.3m), a decrease of £6.3 million in the period.
£MILLION
EBITDA
Exceptional items - IPO fees
Net working capital cash flow
Operating cash flow
Interest - net
Tax paid
Capital expenditure - core
Free cash flow (core capex)
Capital expenditure - new Head Office
Cash flow before financing
FY18
21.1
-
(5.9)
15.1
(0.3)
(2.2)
(12.5)
0.1
(4.7)
(4.6)
FY17
16.9
(0.3)
(1.0)
15.6
(0.2)
(1.0)
(10.7)
3.7
-
3.7
INVENTORY
Inventory at year end, including inbound goods-in-transit
was £32.8 million (FY17: £21.2m). The increase in
inventory reflects the growth of the business in the UK and
internationally, and the timing of seasonal stock deliveries
relative to the prior year.
CAPITAL EXPENDITURE
Investment in property, plant, equipment and intangible assets
totalled £17.3 million in FY18 (FY17: £10.7m). The increase in
the year was due to a higher number of new store openings and
relocations, the completion of our Microsoft Dynamics AX ERP
implementation and the acquisition of the site for our new head
office development.
At the start of the year we acquired the freehold interest in
a plot of land and an existing office facility for £4.5 million.
This site will be the location for our new head office facility.
After a period of development including construction of a
new building and refurbishment of the existing building we
anticipate that the capital expenditure on this development
will be in the range of £16 million to £18 million over the
next two to three years.
BORROWINGS
Group borrowings were £8.5 million at the year-end (FY17:
£0.6m). During the year, the Group entered into a five-
year term loan agreement with Barclays Bank Plc for £3.5
million (the Term Loan) to part fund the acquisition of
the site for development of our new head office facility in
Market Harborough.
The Group has a £25 million revolving credit facility
provided by Barclays Bank Plc to fund seasonal working
capital requirements (the RCF). This facility matures in
July 2021.
At the year-end the total Group borrowings comprised of the
RCF £5.0 million (FY17: £nil); the Term Loan £3.2 million
(FY17: £nil), and legacy asset finance loans £0.3 million
(FY17: £0.6m).
26 P R I N C I PA L R I S KS A N D U N C E R TA I N T I E S
P R I N C I PA L R I S KS A N D U N C E R TA I N T I E S
J O U L E S G R O U P P LC
Set out below are the principal risks and uncertainties that the Directors consider could impact the business. The Board
regularly reviews the potential risks facing the Group and the controls in place to mitigate any potential adverse impacts.
The Board also recognises that the nature and scope of risks can change and that there may be other risks to which the Group
is exposed and so the list is not intended to be exhaustive.
The Corporate Governance Report includes an overview of our approach to risk management and internal control systems and processes.
EXTERNAL RISKS
External risks reflect those risks where we are unable to influence the likelihood of the risk arising and therefore focus
is on minimising the impact should the risk arise.
RISK AND IMPACT
Economy
MITIGATING FACTORS
The majority of the Group’s revenue is generated from sales in
the UK to UK customers. A deterioration in the UK economy
may adversely impact consumer confidence and spending on
discretionary items. A reduction in consumer expenditure could
materially and adversely affect the Group’s financial condition,
operations and business prospects.
Brexit has increased the likelihood and potential impact of
this risk.
As a premium lifestyle brand with a geographically disperse
retail store portfolio, a strong e-commerce channel and long-
standing wholesale customer accounts, the Directors consider
that the UK business would be less affected by a reduction in
consumer expenditure than many other clothing retailers.
In addition, the property portfolio has short lease terms,
providing relative flexibility to close or relocate stores should
it become necessary.
Brexit
The anticipated exit of the UK from the EU in March 2019
adds complexity and uncertainty across many areas of the
Group’s operations that could impact on; our ability to get
products to customers in a timely manner and; on product
profit margins.
Specific risks impacted are higlighted in this table.
A Brexit ‘task force’ has been established to monitor and
evaluate the potential impacts of different scenarios and to
implement mitigations.
An option for an EU based distribution arrangement
has been established to mitigate potential supply chain
disruption and adverse duty impacts.
The lack of clarity on the nature and timing of the post-
Brexit arrangements make it challenging to plan mitigation
strategies effectively.
Competitor Actions
New competitors or existing clothing retailers or lifestyle
brands may target our segment of the market. Existing
competitors may increase their level of discounting or
promotions and/or expand their presence in new channels.
These actions could adversely impact our sales and profits.
Joules differentiates from competitors through its strong
brand and products that are known for their quality,
details, colour and prints. Our large customer database
allows the Group to communicate effectively with customers,
developing customer engagement and loyalty.
Foreign Exchange
The Group purchases the majority of its product stock from
overseas and is therefore exposed to foreign currency risk,
primarily the US Dollar.
Without mitigation, input costs may fluctuate in the short
term, creating uncertainty as to profits and cash flows.
Brexit has increased the volatility in this area that may be
sustained or worsen going forward.
The Group’s Treasury Policy sets out the parameters
and procedures relating to foreign currency hedging.
We currently seek to hedge a material proportion of
forecasted US Dollar requirement 12-24 months ahead
using forward contracts.
The Group’s US wholesale business generates US Dollar
cash flows which provide a degree of natural hedging.
Regulatory and Political
New regulations or compliance requirements may be
introduced from time to time. These may have a material
impact on the cost base or operational complexity of the
business. Non-compliance with the regulation could result
in financial penalties.
Brexit has increased uncertainty in this area.
The General Data Protection Regulation (GDPR) is a
specific example of a new, complex regulation with significant
financial penalties for non-compliance.
The Group has processes in place to monitor and report to
the Board on new regulations and compliance requirements
that could have an impact on the business. The impact of
any new regulation is evaluated and reflected in the Group’s
financial forecasts and planning.
In relation to GDPR, the Board established a steering group,
12 months ahead of the implementation date, to identify any
compliance gaps and monitor progress to achieve compliance
by the deadline.
P R I N C I PA L R I S KS A N D U N C E R TA I N T I E S 27
INTERNAL RISKS
Internal risks reflect those where we can influence the likelihood of the risk arising and the impact if the risk should arise.
RISK AND IMPACT
Brand and Reputation
MITIGATING FACTORS
The strength of our brand and its reputation are very
important to the success of the Group.
Failure to protect and manage this could reduce the
confidence and trust that customers place in the business,
which could have a detrimental impact on sales, profits
and business prospects. Our brand may be undermined or
damaged by our actions or those of our wholesale partners
or through infringement of our intellectual property (IP).
Brand and reputation are monitored closely by senior
management and the Board. The Group’s public relations
are actively managed and customer feedback, both direct
and indirect, is carefully monitored.
We carefully consider each new trade customer with whom
we do business and monitor on an ongoing basis.
We actively monitor for potential IP infringements and have
a process to determine the appropriate course of action to
protect our brand and IP vigorously.
Product Sourcing
The Group’s products are predominantly manufactured
overseas. Failure to carry out sufficient due diligence and
to act in the event of any negative findings, especially in
relation to ethical or quality related issues, could adversely
impact our brand and reputation.
Design
As with all clothing and lifestyle brands there is a risk that
our offer will not satisfy the needs of our customers or that
we fail to correctly identify trends that are important to our
customer base. These outcomes may result in lower sales,
excess inventories and/or higher markdowns.
The Group has a policy and process for the selection of new
suppliers. This includes a review of compliance with laws
and regulations and that suppliers meet generally accepted
standards of good practice. In addition, suppliers are
required to sign up to the Joules code of conduct.
The Group operates a programme of ethical audits across
the product supply base supported by a third-party agency.
Joules has a long established in-house creative and design
team who have a high level of awareness and understanding
of our target customer segment. A large proportion of our
product range is anchored in classic products that are
evolved season to season.
Early feedback from our trade customers can allow us
to further refine our product range ahead of significant
purchase commitments.
Key Management
Our performance is linked to the performance of our people
and to the leadership of key individuals. The loss of a key
individual whether at management level or within a specialist
skill set could have a detrimental effect on our operations
and, in some cases, the creative vision for the brand.
The Group’s remuneration policy, which includes a long-
term incentive scheme and performance-related pay, is
designed to attract and retain key management. The Group
operates learning and development initiatives to increase the
opportunities for internal succession.
ERP System
In the second half of FY18 we went live across the Group
with a new IT platform, Microsoft Dynamics AX. With any
system and process change of this scale, there is a risk that
it could result in business disruption.
IT Security and Systems Availability
Non-availability of the Group’s IT systems, including the
website, for a prolonged period could result in business
disruption, loss of sales and reputational damage.
Malicious attacks, data breaches or viruses could
lead to business interruption and reputational damage.
The implementation was planned over a two year period
with the first phase going live in November 2015. A dedicated
programme team with significant experience of our processes
and ERP implementation led the implementation and a
business wide training programme. This team has remained in
place post-implementation, reporting regularly to the Group’s
senior management.
A Business Continuity Plan exists to minimise the impact
of a loss of key systems and to recover the use of the system
and associated data. A regular assessment of vulnerability
to malicious attacks is performed and any weaknesses
rectified. All Group employees are made aware of the
Group’s IT security policies and we deploy a suite of tools
(email filtering, antivirus etc.) to protect against such events.
Supply Chain
The disruption to any material element of the Group’s
supply chain, in particular the UK central distribution
centre, could impact sales and impact on our ability to
supply our wholesale customers, stores and consumers.
The business continuity plan includes an established
procedure in the event of the loss of the UK distribution
centre. In addition, the Group maintains insurance cover
at an appropriate level to protect against the impact of
such an interruption.
28 S O C I A L R E S P O N S I B I L I T Y
S O C I A L R E S P O N S I B I L I T Y
R E S P O N S I B LY J O U L E S
OUR STRATEGY
Our Responsibly Joules framework sets out our approach to corporate social responsibility and reflects how we want our
business to operate fairly, responsibly and sustainably. We believe that this approach is not only the right thing to do,
but also drives value for our stakeholders including our customers, employees, investors, local communities and suppliers.
RESPON SI BLY J OUL ES
SOURCING WITH
INTEGRITY
RESPECTING OUR
ENVIRONMENT
CHARITABLY
JOULES
OUR JOULES
FAMILY
Partnering with our
suppliers to create distinctive
products made with care,
consideration and respect
Respecting the environment
for the shire to shore
Inspiring and generating
positive change
Creating and nurturing a vibrant
and supportive team which our
direct and indirect employees are
proud to belong to
We are committed to looking proactively at ways to reduce our environmental impacts and contribute positively to the world
around us. As we grow and operate across more categories and territories, our supply chain and wider business operations
become more complex. We recognise the increased challenges and we know that we are not perfect in everything we do or how
we do it, but we will endeavour to improve our performance and are fully committed to this continual improvement journey.
We have made good progress on the Responsibly Joules agenda during the year, more details of which are provided below.
GOVERNANCE
This year was the second year of the Responsibly Joules
Steering Group, chaired by the Group CFO and comprising
Operating Board members, each with accountability for one
of the four pillars of the Responsibly Joules framework with
the support of functional experts from across the business.
This approach ensures that each pillar is directed by a
senior executive and obtains the right level of buy-in,
employee engagement and support from across the business.
The Responsibly Joules Steering Group provides regular
updates to the Joules Group plc Board with a formal annual
review of strategy and progress.
The Responsibly Joules Charter provides a way to clearly
and consistently communicate our values and expectations,
enabling suppliers and employees to identify ways that they
can contribute and to empower them to ensure that these
principles are considered in all of our activities.
The Responsibly Joules Charter is available on our Group
website www.joulesgroup.com
SOURCING WITH INTEGRITY
Sourcing our products in a responsible manner is central to
our business. ‘Sourcing with Integrity’ includes considering
the raw materials we use, how and where our products are
manufactured, and the transportation of products through
our supply chain.
OUR CHARTER
This year we developed the Responsibly Joules Charter, a
statement which sets out our values and commitments in
relation to our environmental and social responsibilities.
It has been signed by every member of the Operating
Board to confirm their personal commitment and it will be
prominently displayed across the Group.
We strive for best practice in every area and have established
high standards which govern how we manage our supply
chain and partners. We regularly review our product supply
chain to ensure our suppliers meet these requirements.
HOW WE SOURCE OUR PRODUCTS
Strong relationships with trusted suppliers that share our
values and principles are essential. Our Code of Conduct
supplier manual sets out the procedures with which all our
S O C I A L R E S P O N S I B I L I T Y 29
product suppliers must comply. These include standards
in relation to work and labour practices, environmental
performance, raw materials and restricted substances and
animal welfare practices. All our direct suppliers have
signed up to these standards.
We engage an independent compliance organisation to
regularly audit our suppliers using the SMETA audit
process, to ensure that they are meeting or exceeding our
standards for labour and working practices and the best
practice set out by the Ethical Trade Initiative (ETI). New
product suppliers are thoroughly assessed and evaluated as
part of an onboarding process.
We don’t stop there. We have also run a supplier training
programme in the year to help our suppliers drive continued
improvement in their performance and standards. This
included our third-party compliance partner providing a
training session on some of the more challenging areas of
compliance and showing our suppliers how to achieve them.
RESPECTING OUR ENVIRONMENT
A love of the countryside is, and always has been, at the
heart of the Joules brand; creating meaningful products
inspired by nature and the changing seasons, all perfect for
enjoying the great outdoors or cosy indoors. Respecting and
considering the environment from which we constantly draw
inspiration is fundamental to our business.
We are proud that Joules clothes are known for their high
durability and quality, providing many years of use and
often being passed on or handed down. This is particularly
relevant when some reports suggest that nearly two-thirds
of clothing created by the retail industry overall ends up in
incinerators or landfill within a year of being produced.
To provide us with a comprehensive understanding of our
environmental impacts across our full product lifecycle -
from the sourcing of raw materials, through to the way our
customer ultimately uses our products - we have developed
the following framework.
Achievements this year include:
• All of our direct suppliers have signed up to our
responsible sourcing standards
• All ‘Tier 1’ suppliers (which include those making our
end product) were independently audited in the year.
We continue to roll out our audit process across
our remaining, smaller component suppliers
• We have replaced feather and down with a new corn-fill
material which we are now using across our full product
range
• We are actively increasing the amount of sustainable
cotton used across our product range
Industry bodies
During the year we increased our interaction and dialogue
with several industry bodies that are implementing
programmes or setting standards to drive improvements in
ethical practices and developing sustainable production of
clothing and footwear.
We intend to build on this in the coming year, with initial
priorities being: increasing the proportion of sustainable
cotton used in our products; and the leather goods supply
chain. We are really pleased that, since the year end, we
have commenced our membership process with the Better
Cotton Initiative (BCI), the Leather Working Group, and the
Ethical Trade Initiative (ETI). Working closely with these
organisations over the coming years will be an important
focus area.
HEAD OFFICE
MATERIAL
CUSTOMER
FR AMEW ORK FOR
ASS ES SIN G IMPACTS
MANUFACTUR ING
What areas of our
product lifecycle does
our strategy cover?
CHANNELS
DISTRIBUTION
30 S O C I A L R E S P O N S I B I L I T Y
S O C I A L R E S P O N S I B I L I T Y
C O N T I N U E D
We invested time during the year to identify and map our
environmental impacts across each of these areas and to
identify, evaluate and prioritise potential actions to reduce
and/or mitigate the impacts. Our current priorities include:
• Reviewing each element of our packaging to minimise
total packaging, reduce use of plastics and increase the
levels of recycled and recyclable packaging across our
supply chain
• Working with industry bodies such as the Better
Cotton Initiative and Leather Working Group to
ensure that our raw materials are sourced in an
environmentally responsible manner
• Measuring, reporting and identifying initiatives to
minimise the environmental impact of our head office,
stores and distribution process wherever possible
This is a significant and ongoing task and we have made
great progress this year. We recognise we still have a long
way to go but we look forward driving further improvements
in the coming years.
Achievements this year include:
• We have replaced plastic bags in store with a fully
recyclable paper twist bag, in addition to our existing
beautiful Joules re-usable bags
• More than one million annual e-commerce / mail-order
plastic mail sacks are being replaced with a sustainably
produced sugarcane bag that is also fully recyclable
• Our volunteering efforts have had a significant
environmental impact with initiatives including beach
cleans, tree planting and canal clean ups
• 70% of our stores our now fitted with the more energy
efficient LED lighting
• All of our waste from head office and stores is now either
recycled or taken to a recovery/transfer centre where the
waste is sorted to minimise the proportion that ends up
in landfill
• Several successful head office initiatives to reduce
• waste through a reduction of printing and use of single
use plastics
CASE STUDY: BEACH CLEAN - 2018
RESPECTING OUR ENVIRONMENT … ACTING LOCALLY
Joules has sponsored the Coast Beach Clean for over ten
years and this year, partnering with Coast Magazine and
Marine Conservation Society, we went bigger and better,
adding five additional beach cleans along the coast. In April
2018 over 160 Joules customers and employee volunteers
took part in six beach cleans across the country, removing
a staggering 15,433 pieces of litter weighing 128kg.
Lauren Eyles, Beach Watch programme manager from the
Marine Conservation Society was thrilled with the effort;
“Thank you Joules! We are so grateful for your support of
our beach clean work and to extending our one beach clean
with Coast Magazine to an additional five across the UK.
You have all showed so much enthusiasm during the events
and the impact has been amazing. We now have lots more
data to stop litter from reaching our beaches and causing so
much devastation”.
Our Joules stores sit at the heart of local communities
across the country and, as such, we believe we have an
important role to play in supporting those communities
to thrive. Our Charitably Joules strategy does just this,
supporting charities which play crucial roles in the lives
of children, young adults and families across the country.
Our Charitably Joules family is made up of four core
charities that we support throughout the year:
THE PRINCES TRUST supports young people across the
country who are unemployed or struggling at school to
transform their lives. We help to fund their Enterprise
programme in Leicester and Kettering which supports
18-30 year olds to re-focus their lives through exploring
the opportunity of setting up their own business, thereby
creating a long-term sustainable future.
NUZZLETS is a fantastic grassroots charity that not only
provides a loving home for unwanted animals, but also
provides free access for young people with disabilities,
special needs and life-threatening illnesses to visit the
centre for animal assisted therapy and education.
FARMS FOR CITY CHILDREN offers city children the
opportunity to experience life on a working farm in the heart
of the countryside. Through its amazing work, it supports
children’s learning, raises self-esteem and enriches young
lives, providing a safe and welcoming setting where children
and their teachers together get involved for a whole week in
the working life of a real farm.
S O C I A L R E S P O N S I B I L I T Y 31
HOSPICE UK is the national voice of hospice care in the UK.
By supporting hospices all around the country, they help
them to deliver the very best service possible for the local
communities within which they work. As a part of those
local communities, we were very excited to add Hospice UK
as a new Charity Partner to our family in the year.
T HE
PRI NCE’ S
T RUS T
NU ZZLET S
FA RM S FOR C IT Y
C HILDREN
HOS PIC E UK
CASE STUDY: JOULES CHARITY WEEK
This year saw us launch our first ever Joules Charity
Week. Suppliers, customers and employees from across
the business took part in a wide range of activities to raise
money for our four Charitably Joules charities. From a
business wide fancy-dress day, bake sales and various
local store initiatives to our Bolt-to-Holt team - who ran
and cycled 118 miles overnight from our Head Office to the
grand opening of our new Holt store - we raised an amazing
£30,000 for our charities in just one week. We can’t wait to
see what our 2019 Charity Week has in store.
CASE STUDY: THE PRINCES TRUST FUTURE
STEPS CHALLENGE
In February 2018, 480 of our employees took part in The
Princes Trust Future Steps challenge. Competing in teams
of six, the challenge was to walk as many steps as possible
for The Princes Trust, raising money as we went.
Over the course of the month, our amazing teams clocked up
more than 125 million steps and raised over £14,000 for The
Princes Trust … and had a huge amount of fun doing it!
CASE STUDY: SUPPORTING HOSPICE UK THROUGH
OUR STORES
Our newest Charitably Joules Partner is Hospice UK. Each
of our stores across the country is now linked in with its
local hospice and stores are already getting involved in
supporting on a local level, whether through taking part in
their sponsored Moonlight Walk, or donating product.
In May, we supported their annual Retail Conference for
the hospice charity stores all around the country. We aim
to provide some of our retail experience and advice to help
Hospice UK and local hospice stores around the country to
thrive. At this year’s conference, we ran an interactive social
media workshop to support the hospice shops in developing
their social media activities.
Our Achievements in the year include;
• In total, we raised over £140,000 for our Charitably
Joules charities, as well as local charities and community
groups, including £7,600 contributions in kind, including
stock donations and £6,750 of company matching for our
employees’ fund-raising activities
• Joules Charity Week saw our staff and customers raise
£30,000 for our Charitably Joules charities
• We have shared our skills with our charity partners
to support them in their work. This includes running
workshops for Hospice UK, supporting Farms for City
Children in developing their newsletter and supporting
Nuzzlets in the development of an animal therapy book
• We took part in The Princes Trust Future Steps challenge
in a big way, with 80 teams of six employees, walking 125
million steps over a month to raise over £14,000 for The
Princes Trust
S O C I A L R E S P O N S I B I L I T Y 33
The table below summarises employee gender diversity across the business as at 27 May 2018:
Directors of the Group
Directors of the Operating Board (including three male Group Directors)
Senior Managers other than Directors of the Group or Operating Board
Other employees of the Group
Total employees of the Group
FEMALE
1
7
75
1,361
1,444
MALE
5
4
30
236
272
32 S O C I A L R E S P O N S I B I L I T Y
S O C I A L R E S P O N S I B I L I T Y
C O N T I N U E D
OUR JOULES FAMILY
Our Joules family continues to grow and with it, so does
our focus on recruiting, retaining and developing the best
possible people, as well as maintaining and enhancing the
working environment and culture which we are so proud of
at Joules.
We continue to develop our employee offering, expanding
existing areas as well as launching several new
programmes. During the year we:
• Improved the maternity/paternity/adoption benefits for
our people
• Increased the employer pension contribution rate from
1% to 3% for all eligible employees
• Introduced some further new benefits to our colleagues
including a holiday purchase scheme, an additional
“family day” days holiday and the cycle to work scheme
• Increased the number of employee volunteering days to
two days per year
• Continued the Management Development and Leadership
Development programme launched in the prior year
• Launched a store assistant manager development
programme for 77 of our assistant managers and a
successful apprenticeship programme for store supervisors
• Offered the second Save as You Earn (SAYE) share
scheme to all employees … with strong uptake of over a
fifth of eligible employees
and we were proud to win the Leicestershire Cares
‘Outstanding Contribution to Community Development’
award for our work volunteering in the local community.
Employee engagement and communications is achieved
through regular ‘Directors briefings’ to all head office and
warehouse employees, a weekly newsletter and the Group
intranet. We hold a store manager conference twice per year
and issue a weekly newsletter for all store based employees.
The communications aim to keep employees up to date on
Group initiatives and financial performance. We encourage
employee feedback through formal and informal channels.
During the year we:
• Held our first combined head office and store manager
communications day in August 2017 to update on the
annual results and business strategy
• Launched an internal social media platform for employees
based on Microsoft’s Yammer application
• Relaunched the Joules Intranet as the central information
and resource portal for all employees across the Group
• Held over 20 listening groups with colleagues across
the business to obtain feedback and ideas from a wide
range of areas including the requirements for the new
head office development, as well as additional briefing
sessions on a variety of topics including Gender Pay Gap
Reporting, Pensions and GDPR
Volunteering is encouraged across all our employees as it plays
an important role in supporting our charity partners and local
communities and is valuable experience for the individual or
teams that volunteer. We continued to work with Leicestershire
Cares on a range of local volunteering initiatives during the
year and to further our commitment in this area we added an
additional volunteering day for all employees.
During the year over 100 employees took part in
volunteering activity through individual and team initiatives
We are an equal opportunities employer and give full and
fair consideration to employment applications regardless
of race, gender and/or disability, having regard to an
applicant’s aptitudes and abilities. We also strive to provide
ongoing training, career development and promotion
opportunities for all employees. In the unfortunate event
that an employee should become disabled we are committed
to continuing their employment and for arranging
appropriate training.
Here at Joules we have a family of incredibly valued
colleagues. We are committed to ensuring that all our
team members, regardless of gender, receive the same
support and opportunities to progress, develop and enjoy a
rewarding career with us. We recently published our gender
pay gap information (gender pay gap is the difference
between our male and female mean and median salaries
across the whole organisation) and we were encouraged
to see that at 15% our median pay gap is below the UK
National Average (18.4%). The fact that a gender pay gap
exists at Joules is, we believe, due to the structure of our
business rather than any inequality in how we pay men and
women for doing the same role. We are proud that 64% of
our Operating Board, 70% of our Senior Management Team
and 72% of our upper quartile employees are female, against
a UK average of 23% (Operating Board) and 46% (SMT
(CIPD, 2016)). We continue to look at ways that we can
evolve and improve these results.
2CHAPTER
CORPORATE
GOVERNANCE
we’ve got
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36 C O R P O R AT E G OV E R N A N C E
B OA R D O F D I R E C TO R S
J O U L E S G R O U P P LC
C O R P O R AT E G OV E R N A N C E 37
G OV E R N A N C E F R A M E W O R K
J O U L E S G R O U P P LC
NEIL MCCAUSLAND
Non-Executive Chairman
TOM JOULE
Founder & Chief Brand Officer
COLIN PORTER
Chief Executive Officer
Neil joined Joules in 2013. He also chairs Karen
Millen, Create Fertility and Skin Ltd. Neil was
the Senior Independent Director of the Post Office
Limited for four years until September 2015,
where he chaired the remuneration committee
and served on both the audit and nominations
Tom founded Joules in 1989 selling practical, high
Colin joined Joules in 2010 from Crombie, where
quality garments at shows and events around
he was Joint Managing Director. Prior to this
the U.K. Tom’s entrepreneurial spirit, and flair
Colin spent over 10 years at House of Fraser,
in giving products personality to match those of
becoming Commercial Director on the main board.
Joules customers’ colourful and uplifting outlook,
Colin has also held a number of senior positions
has been central to the brand’s continued success
within the retail sector including at Etam, Laura
committees. Prior to that he was a Non-Executive
and expansion. Now a global lifestyle brand, in
Ashley and Arcadia.
Director of Nuffield Health. Over the last 15 years
his current role, Tom is focused on connecting
he has chaired a number of companies, including
with the Joules customer and category product
six years as chairman of Kurt Geiger.
direction. Since 2010, Tom has featured regularly
in Drapers 100 Most Influential people in Fashion
Retail. In 2015 he was a finalist in the Fashion
Entrepreneur of the Year category at the Great
British Entrepreneur Awards.
MARC DENCH
Chief Financial Officer
DAVID STEAD
Senior Independent Non-Executive Director
JILL LIT TLE
Independent Non-Executive Director
Marc joined Joules in 2015 from Walgreens
David joined the Board in April 2016. David is
Jill joined the Board in April 2016. Jill is currently
Boots Alliance, where he was Chief Financial
currently on the board of Card Factory plc and
the Senior Non-Executive Director of Shaftesbury plc
Officer of its International Retail & Global
Majestic Wine plc as an Independent Non-
and previously chaired their remuneration committee.
Consumer Brands division. Marc has previously
Executive Director and is a member of the Council
Jill has spent the majority of her career in the retail
held a number of senior financial and corporate
at the University of Birmingham. He has many
industry, firstly at Simpsons of Piccadilly and then
development positions at Alliance Boots,
years’ experience as a director of companies in the
at the John Lewis Partnership (1975 to 2012). Jill
Homeserve, Experian and Freeserve plc. Whilst at
Freeserve, he was involved in the successful IPO
process and the subsequent merger with Wanadoo.
Marc is a chartered accountant and has an MBA
from Sauder Business School.
UK retail sector. David was the CFO of Dunelm
Group plc for 12 years from 2003 to 2015. Prior to
this, David served as Finance Director for Boots
The Chemists and Boots Healthcare International
between 1991 and 2003. David is a chartered
accountant, having spent the early part of his
career with KPMG.
became Merchandise Director on the board of John
Lewis, moving roles to become the Strategy and
International Director where she was responsible for
developing the long-term strategy and international
expansion of John Lewis. Thereafter Jill became
Business Development Director of the John Lewis
Partnership. Jill is also Chairman of National Trust
Enterprises Ltd, National Trust Renewable Energy
Ltd and their advisory Commercial Group. Since
March 2017, Jill has also sat on the board of Nobia
AB, as a non-executive Director.
CHAIRMAN’S INTRODUCTION
I have pleasure in introducing the Joules Group plc
Corporate Governance Statement, our third since our
admittance to trading on AIM on 26 May 2016. The Board
is committed to supporting high standards of corporate
governance and, for this reason, we have continued to operate
appropriate measures to comply, as far as is practicable,
with the April 2016 UK Corporate Governance Code (the
“Code”). In this section of the Annual Report we set out our
governance framework and describe the work we have done
to ensure good corporate governance throughout Joules
Group plc and its subsidiaries (‘the Group’).
NEIL MCCAUSLAND
Non-Executive Chairman.
BOARD SIZE AND COMPOSITION
For the financial year ended 27 May 2018, the Board has
continued to comprise of six Directors: a Non-Executive
Chairman, two further Non-Executive Directors and three
Executive Directors.
ROLE OF THE BOARD
The Board is collectively responsible for the long term
success of the Group. It provides entrepreneurial leadership,
sets Group strategy, upholds the Group’s culture and values,
reviews management performance and ensures that the
Group’s obligations to shareholders are understood and met.
HOW THE BOARD OPERATES
The Executive Directors are responsible for business
operations and for ensuring that the necessary financial
and human resources are in place to carry out the Group’s
strategic aims. The Non-Executive Directors’ role is to
provide an independent view of the Group’s business and
to constructively challenge management and help develop
proposals on strategy. The Board as a whole reviews all
strategic issues and key strategic decisions on a regular
basis. Control over the performance of the Group is
maintained through evaluation of financial information; the
monitoring of performance against key budgetary targets;
and by monitoring the return on strategic investments.
The Chairman takes responsibility for ensuring that the
Directors receive accurate, timely and clear information.
Directors are aware of their right to have any concerns
recorded in the Board minutes.
The Board is satisfied that all Directors are able
to allocate sufficient time to the company to discharge
their responsibilities effectively.
MAT TERS RESERVED FOR THE BOARD
Certain matters are reserved for approval by the Board,
these include:
• Strategy and business plans – including annual budget
• Acquisitions and disposals of businesses (including
minority interests)
• Changes in share capital and dividends
• Board membership and Committees and delegation
of authority
• Remuneration and employment benefits
• Corporate statutory reporting
• Appointment of auditors
• New debt facilities
• Major capital and revenue commitments
• Corporate governance, policy approval, internal control
and risk management
• Certain litigation matters in line with the Joules litigation
reporting policy
• Corporate social responsibilities
BOARD MEETINGS
The Board has met eleven times in the reporting period.
For all Board meetings an agenda is established and a Board
pack is circulated at least 48 hours ahead of the meeting.
As a minimum, the items covered include:
• Financial performance review
• Management accounts and KPIs
• Update on governance, finance, legal & risk matters
• Updates on significant business initiatives
• Proposals on any major items of capital expenditure
• Health and Safety
• Compliance with banking covenants and cash
flow forecast
The Board receives reports from the Executive Directors to
enable it to be informed of and supervise the matters within
its remit. The Board considers at least annually the Group’s
strategic plan and, on a regular rolling basis, the Board
receives presentations from management on key areas of the
Group’s operations.
38 C O R P O R AT E G OV E R N A N C E
G OV E R N A N C E F R A M E W O R K
C O N T I N U E D
BOARD MEETINGS
The following table shows Directors’ attendance at scheduled Board and Committee meetings in the period under review:
NEIL MCCAUSLAND
TOM JOULE
COLIN PORTER
MARC DENCH
DAVID STEAD
JILL LITTLE
BOARD
11/11
9/11
11/11
11/11
11/11
11/11
AUDIT
3/3
-
-
-
3/3
3/3
REMUNERATION
NOMINATION
3/3
-
-
-
3/3
3/3
4/4
-
-
-
4/4
4/4
BOARD DECISIONS AND ACTIVITY DURING THE YEAR
The Board has a schedule of regular business, financial
and operational matters, and each Board Committee has
compiled a schedule of work, to ensure that all areas for
which the Board has responsibility are addressed and
reviewed during the course of the year. The Chairman,
aided by the Company Secretary, is responsible for ensuring
that the Directors receive accurate and timely information
to enable the Board to discharge its duties. The Company
Secretary compiles the Board and Committee papers
which are circulated to Directors at least 48 hours prior to
meetings. The Company Secretary also ensures that any
feedback or suggestions for improvement on Board papers is
fed back to management. The Company Secretary provides
minutes of each meeting and every Director is aware of the
right to have any concerns minuted.
BOARD COMMIT TEES
The Board has delegated specific responsibilities to the
Audit, Remuneration and Nomination Committees. Each
Committee has written terms of reference setting out its
duties, authority and reporting responsibilities, with copies
available on the Company’s website (www.joulesgroup.com)
or on request from the Company Secretary. The terms of
reference of each Committee were put in place at the time
of the Company’s admission to AIM on 26 May 2016
and they are kept under review to ensure they remain
appropriate and reflect any changes in legislation,
regulation or best-practice. Each Committee comprises
Non-Executive Directors of the Company. The Company
Secretary is the secretary of the Audit and Nomination
Committees and the Group Legal Counsel is secretary for
the Remuneration Committee.
BOARD EFFECTIVENESS
The skills and experience of the Board are set out in
their biographical details on page 34. The experience
and knowledge of each of the Directors gives them
the ability to constructively challenge strategy and to
scrutinise performance.
SEPARATION OF DUTIES
There is a clear division of responsibilities between the
Chairman and Chief Executive Officer. Neil McCausland,
the Chairman, leads the Board and is responsible for its
effectiveness and governance. He sets the Board agenda
and ensures that sufficient time is allocated to important
matters, in particular strategic issues. Colin Porter, the
Chief Executive Officer, is responsible for the day-to-day
management of Joules’ operations and for recommending
strategy to the Board. Colin is then responsible for
implementing that strategy supported by the wider
management team.
The Non-Executive Directors have responsibility for
determining the remuneration of Executive Directors and
have a prime role in appointing and, where necessary,
removing Executive Directors, and in succession planning.
INDUCTION OF NEW DIRECTORS
No new Directors were appointed during the year and there
were no resignations. It is intended that, in the future, on
joining the Board, new Directors will undergo an induction
programme which will be tailored to the existing knowledge
and experience of the Director concerned, including store and
office visits; meetings with key employees; and presentations
from management on topics such as strategy, finance and
risk. The Chairman will be responsible for this process.
TIME COMMITMENTS
The Board is satisfied that the Chairman and each of the
Non-Executive and Executive Directors continue to be
able to devote sufficient time to the Company’s business.
There has been no change in the Chairman’s other time
commitments since his appointment.
EVALUATION
The Board conducted a thorough and formal Board review
at the end of the prior financial year. This was led by the
Chairman and consisted of interviews; the completion of
a questionnaire; and in-depth discussions between the
Executive and Non-Executive Directors.
C O R P O R AT E G OV E R N A N C E 39
No major changes to the function and focus of the Board
arose from this evaluation, however, the findings were
used by the Board, and the Nomination Committee, when
considering short and long-term succession planning.
Following the announcement on 22 May 2018, that Ian Filby
will be taking over the role of Chairman on 1 August 2018,
it was determined by the Board that the next formal Board
evaluation should take place when Ian has been in the role
for an appropriate period of time.
The Chairman will continue to meet regularly with the Non-
Executive Directors without the Executive Directors being
present and the Senior Independent Non-Executive Director
will also meet with his fellow Non-Executive Director, at
least annually, to appraise the Chairman’s performance and
on such other occasions as are deemed appropriate.
DEVELOPMENT
The Company Secretary ensures that all Directors are kept
abreast of changes in relevant legislation and regulations,
with the assistance of the Group’s advisers where
appropriate. Executive Directors are subject to the Group’s
performance development review process through which
their performance against objectives is reviewed and their
personal and professional development needs considered.
EXTERNAL APPOINTMENTS
In the appropriate circumstances, the Board may authorise
Executive Directors to take non-executive positions in other
companies and organisations provided the time commitment
does not conflict with the Director’s duties to the Company.
The appointment to such positions is subject to Board approval.
CONFLICTS OF INTEREST
At each meeting the Board considers Directors’ conflicts of
interest. The Company’s Articles of Association (‘Articles’)
provide for the Board to authorise any actual or potential
conflicts of interest.
INDEPENDENT PROFESSIONAL ADVICE
Directors have access to independent professional advice
at the Company’s expense. In addition, they have access to
the advice and services of the Company Secretary who is
responsible for advice on corporate governance matters to
the Board.
DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
The Company has purchased directors’ and officers’
liability insurance during the year as allowed by the
Company’s Articles.
ELECTION OF DIRECTORS
In accordance with the Code all Directors will offer
themselves for election at each AGM.
can provide only reasonable, but not absolute, assurance
against material misstatement or loss. The Board considers
that the internal controls in place are appropriate for the
size, complexity and risk profile of the Group. The principal
elements of the Group’s internal control system include:
• Day to day management of the activities of the Group by
the Executive Directors
• A detailed annual budget is prepared including an
integrated profit and loss, balance sheet and cash flow.
The budget is approved by the Board
• Monthly reporting of performance against the budget is
prepared and reviewed by the Board
• A schedule of delegated authority is maintained which
defines levels of approval authority over such items as
capital expenditure, commercial contracts, litigation and
treasury matters
• Maintenance of a risk register which is reviewed at least
annually by the Board
The Group continues to review its system of internal control
to ensure compliance with best practice, whilst also having
regard to its size and the resources available.
BOARD DIVERSITY
The Board does not have a formal Board diversity policy
but plans to continue to review the need for such a policy
annually, taking into account the size of the Board and
skills required.
RELATIONS WITH SHAREHOLDERS
The Group maintains communication with institutional
shareholders through individual meetings with Executive
Directors, particularly following publication of the Group’s
interim and full year preliminary results. All shareholders
are encouraged to attend the Annual General Meeting
at which the Group’s activities will be considered and
questions answered. General information about the Group
is also available on the Group’s website: www.joulesgroup.
com. This includes an overview of activities of the Group
and details of all recent Group announcements. The Non-
Executive Directors are available to discuss any matters
stakeholders might wish to raise, and the Chairman and
Non-Executive Directors will attend meetings with investors
and analysts as required. Investor relations activity and
a review of the share register are standing items on the
Board’s agenda and the Chairman ensures ongoing, effective
communication with shareholders.
The Senior Independent Non-Executive Director is available
to shareholders if they have concerns which contact through
the normal channels of Chairman, Chief Executive or other
Executive Directors fails to resolve or for which such contact
is inappropriate.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Board has ultimate responsibility for the Group’s
system of internal control and for reviewing its
effectiveness. However, any such system of internal control
ANNUAL GENERAL MEETING (‘AGM’)
The Company’s AGM will take place on 27 September 2018.
The Annual Report and Accounts and Notice of the AGM
will be sent to shareholders at least 20 working days prior
to this date.
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On behalf of the Board, I am pleased to present the Audit
Committee report for the 52 weeks ended 27 May 2018.
The main items of business considered by the Audit
Committee during the year have included:
The Audit Committee has responsibility for, amongst other
things, the monitoring of the financial integrity of the
financial statements of the Group and the involvement of
the Group’s external auditors in the external audit process,
together with providing oversight and advice to the Board in
relation to current and potential future risk exposures of the
Group, reviewing and approving various formal reporting
requirements and promoting a risk awareness culture
within the Group. The Audit Committee also provides advice
to the Board as to whether the annual report and accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to
assess the Company’s position and performance, business
model and strategy.
MEMBERS OF THE AUDIT COMMIT TEE
The Committee consists of three Non-Executive Directors:
David Stead (Chair), Neil McCausland and Jill Little. The
external auditor (Deloitte LLP), the Chief Executive Officer
and Chief Financial Officer also attend Committee meetings
by invitation. The Committee has met three times since
24 July 2017 being the date the Group’s last Annual Report
was approved.
The Board is satisfied that I, as Chairman of the
Committee, have recent and relevant financial experience.
I am a chartered accountant and I have served as Finance
Director in a number of companies including Dunelm
Group plc. I report formally to the Board, as appropriate,
on issues discussed by the Audit Committee and I present
the Committee’s recommendations.
The Committee also takes time to meet with the
external auditors without any Executive Directors or
senior management present.
DUTIES
The duties of the Audit Committee are set out in its Terms
of Reference, which are available on the Company website
(www.joulesgroup.com) and are also available on request
from the Company Secretary.
The Committee meets a minimum of twice per year.
• Review of the financial statements and Annual Report
• Consideration of the external audit report and
management representation letter
• Going concern review
• Review of the risk management and internal control
systems, and of the Company’s risk register
• Review of the need for an internal audit function
• Review of whistleblowing reports
• Review of the implications of forthcoming updates
or changes to accounting standards
ROLE OF THE EXTERNAL AUDITOR
The Audit Committee monitors the Company’s relationship
with the external auditor, Deloitte LLP, to ensure
that external auditor independence and objectivity are
maintained. As part of its review the Committee monitors
the provision of non-audit services by the external auditor.
The breakdown of fees between audit and non-audit services
is provided in note 5 of the Group’s financial statements.
The non-audit fees related to Remuneration Committee
advice. The Committee also assesses the external auditor’s
performance. Having reviewed the external auditor’s
independence and performance, the Audit Committee
recommends that Deloitte LLP be re-appointed as the
Company’s external auditor at the next AGM.
AUDIT PROCESS
The external auditor prepares an audit plan that sets
out the scope of the audit, key areas of audit focus, audit
materiality and the audit timetable for audit work.
This plan is reviewed and agreed in advance by the
Audit Committee. Following the completion of its work,
the external auditor presents its findings to the Audit
Committee for discussion.
INTERNAL AUDIT
At present the Group does not have an internal audit
function. In view of the size and nature of the Group’s
business, the Committee believes that management is able
to derive assurance as to the adequacy and effectiveness of
internal controls and risk management procedures without
a formal internal audit function. This will be kept under
review as the business evolves.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Group has a framework of risk management and
internal control systems, policies and procedures. The
Audit Committee is responsible for reviewing the risk
management and internal control framework and ensuring
that it operates effectively. The Committee has reviewed the
framework and is satisfied that the internal control systems
in place are currently operating effectively.
WHISTLEBLOWING
The Group has in place a whistleblowing policy which
sets out the formal process by which an employee of the
Group may, in confidence, raise concerns about possible
improprieties in financial reporting or other matters.
Whistleblowing is a standing item on the Committee’s
agenda, and updates will be provided at each meeting.
During the period, there were no incidents for consideration.
GOING CONCERN
The Directors have prepared a detailed financial forecast
with a supporting business plan covering the medium term
future. The forecast indicates that the Group will remain in
compliance with covenants throughout the forecast period.
As such, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern
basis in preparing financial statements.
DAVID STEAD
Audit Committee Chairman
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On behalf of the Board I am pleased to present the
Nomination Committee Report for the 52 weeks ended 27
May 2018 (FY18).
MEMBERS OF THE NOMINATION COMMIT TEE
The Nomination Committee consists of three Non-Executive
Directors; Neil McCausland (Chair), David Stead and Jill
Little. Executive Directors attend by invitation.
DUTIES
In carrying out its duties, the Nomination Committee is
primarily responsible for:
• Identifying and nominating candidates to fill Board
vacancies
• Evaluating the structure and composition of the Board
with regard to the balance of skills, knowledge and
experience and making recommendations accordingly
• Drafting the job descriptions of all Board members
• Reviewing the time requirements of Non-Executive
Directors
• Giving full consideration to succession planning
• Reviewing the leadership of the Group
The Committee is scheduled to meet once a year but it will
meet more frequently if required.
The Committee reports to the Board on how it has
discharged its responsibilities. The Committee’s written
Terms of Reference are available on the Group’s website
(www.joulesgroup.com).
ACTIVITY DURING THE YEAR
The Committee has met formally four times during the
year, the additional meetings being convened to support
the successful recruitment of a replacement Non-Executive
Chairman for the Group. The search was led by David
Stead, the Senior Independent Non-Executive Director, and
involved an extensive selection process. An appropriate
external recruitment agency was engaged to assist with
the process and a pool of suitably qualified and experienced
candidates was prepared as an initial step.
A multi stage assessment and interview process was then
undertaken with input from other Non-Executive and
Executive Directors as appropriate to ensure that the
correct candidate was identified. The outcome of the process
was the announcement on 22 May 2018 that Ian Filby will
become the Group’s next Non-Executive Chairman on
1 August 2018.
In addition to this recruitment activity, during the year the
Committee has continued to focus its work on the following:
• The structure and composition of the Board and its
Committees. The Committee discussed the skills,
experience and diversity of the current Board and
committee members taking into account the current
and future needs of the Group, its culture and strategic
objectives. The Committee believes that the Board has
the necessary balance of skills, knowledge and experience
for its current needs. The Committee believes that the
Directors are able to devote sufficient time to the Group,
taking into account their other Directorships
• The structure of the Operating Board. The Committee
reviewed the current management structure of the Group
and options for the future. In particular, the membership
and work of the Operating Board, which consists of senior
management of the Group and meets monthly to review
performance and progress against strategic objectives
are responsible for the implementation of the Group’s
strategy
• Succession planning. The Committee discussed long term
succession planning and emergency cover, and the need
to identify and develop talent both within the Group and
from the wider market. In its discussions the Committee
recognised the importance of looking at a diverse range of
candidates when considering future appointments
TERMS OF REFERENCE
The committee will keep its terms of reference under review
with the main objective of ensuring that an appropriate
management framework and governance structure is in place.
NEIL MCCAUSLAND
Nomination Committee Chairman
On behalf of the Board I am pleased to present the Directors’
Remuneration Report for the 52 weeks ended 27 May 2018
(FY18). Although not subject to the reporting regulations
of fully listed companies in the UK, the Remuneration
Committee has taken account of these regulations in the
preparation of the FY18 Directors’ Remuneration Report as a
matter of best practice. Therefore, this report is presented as:
• A Directors’ Remuneration Policy Report – setting out the
parameters within which the remuneration arrangements
for Directors operate; and
• An Annual Report on Remuneration – setting out the
remuneration earned by Directors in respect of FY18
and how we intend to apply the policy for FY19
This Directors’ Remuneration Report will be put to an
advisory shareholder vote at the forthcoming annual
general meeting on 27 September 2018.
OUR APPROACH TO REMUNERATION – KEY PRINCIPLES
Our policy on executive remuneration is designed to:
• Include a competitive mix of base salary and short and
long-term incentives, with an appropriate proportion of
the package determined by stretching targets linked to
the Group’s performance
• Promote the long-term success of the Group, in line with
our strategy and focus on profitability and growth; and
• Provide appropriate alignment between the interests
of shareholders and executives, which is further enhanced
through shareholding guidelines and the deferral of a
proportion of the annual bonus as shares
FY18 PERFORMANCE AND ANNUAL BONUS OUTCOME
As detailed in the Strategic Report and Financial Review,
Joules has delivered strong results and made continued
progress against its stated strategic priorities. Good growth
was delivered across distribution channels and geographic
markets, reflecting the growing appeal of the Joules brand
and the quality and design of our products, both in the UK
and internationally. Based on FY18 PBT of £13.0 million the
Executive Directors will receive 99.5% of their maximum
annual bonus opportunity. Half the bonus earned being
paid in cash and half as a share award deferred over three
years, except for Marc Dench, for whom one third of the bonus
earned will be paid in cash and two thirds as a share award
being deferred over three years. Further details are set
out herein.
The Company’s first long-term incentive awards were
granted under the LTIP in July 2016 (‘LTIP 2016’) and
therefore there were no LTIP awards due to vest in respect
of the year ended 27 May 2018. Marc Dench’s IPO
Admission Awards were subject to continued employment to
26 May 2018 and consequently vested on this date.
EXECUTIVE DIRECTOR SALARIES AND NON-EXECUTIVE
DIRECTOR FEES
Executive Directors’ base salaries were reviewed in
December 2017, in line with the salary review timetable for
other head office employees. The base salary for Colin Porter
and Tom Joule was unchanged at £345,000 and £335,000
respectively. The base salary for Marc Dench was increased
from £250,000 to £265,000 with effect from 1 December
2017 taking into account his performance, development in
role and contribution since he joined the business in 2015
and the competitiveness of his package against the market.
During the year the Chairman’s fee, which includes the fee
for chairing the Nomination Committee, was reviewed and
increased from £75,000 to £85,000, taking into account there
being no increase in fees since the IPO.
REMUNERATION FOR THE YEAR COMMENCING
28 MAY 2018
A summary of the proposed application of our remuneration
policy for FY19 is set out below:
• It is intended that Executive Directors’ base salaries will
be reviewed annually in December, at the same time as
the pay review for the wider head office workforce
• The maximum annual bonus opportunity for FY19
will be 100% of salary. The annual bonus is subject to
the achievement of stretching profit before tax (‘PBT’)
performance targets
• The third awards under the LTIP (‘LTIP 2018’) will be
granted following the announcement of the FY18 full
year results. The maximum LTIP opportunity is 100%
of salary. These awards are subject to stretching targets
with 80% of the award linked to an EPS target and 20%
of the award linked to a strategic target of international
revenue. Reflecting best practice, the vesting of the
awards will also be subject to a further underpin, that the
vesting reflects the underlying financial performance of
the Group over the performance period
Following the appointment of Ian Filby as Non-Executive
Chairman, commencing 1 August 2018, the Chairman’s fee
will be increased to £120,000.
The Committee will continue to monitor our remuneration
policy to ensure it remains aligned to the business strategy
and the delivery of shareholder value.
We remain committed to a responsible approach to
executive pay as I trust that this Remuneration Report
demonstrates and hope that we can rely on your continued
support at our AGM.
JILL LIT TLE
Remuneration Committee Chairman
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EXECUTIVE DIRECTORS’ REMUNERATION - AT A GLANCE
We take a rigorous and disciplined approach to ensure that the remuneration package for Executive Directors
rewards the delivery of both short and long-term financial and strategic business goals, that are consistent with
creation of shareholder value. The table below provides a summary of the key elements of the policy and its
application for FY18 and FY19.
BASE SALARY
PENSION
ANNUAL BONUS
ANNUAL BONUS
DEFERRAL
LTIPS
Base salary and benefits are set at a level that is competitive with reference to the
market and companies of a similar size and level of complexity.
Pension contribution rate of 5%.
The company contribution rate for the all employee defined contribution pension scheme
was increased to 3% in April 2018.
Maximum opportunity of 100% of salary*.
Underlying profit before tax (PBT) target selected to best represent alignment with
shareholders.
PBT targets for the FY18 award were: Threshold (25% pay-out) £11.21 million; Target
(50% pay-out); £11.80 million; Maximum (100% pay-out) £12.98m. The maximum payout
target represented a year-on-year growth rate of 28.5%.
Executive Directors will receive 99.5% of their maximum annual bonus opportunity
for 2018, based on FY18 PBT of £12.968 million.
Half of the annual bonus award is paid in the form of shares (two thirds for Marc Dench
in FY18), deferred over three years. Deferral provides alignment with shareholder value
creation objectives.
The LTIP is designed to encourage sustainable development of the Group and creation of
significant shareholder value.
The maximum LTIP opportunity is 100% of salary* vesting over a three-year period
FY19 LTIP targets are: 1) FY21 EPS (80% weighting), and 2) FY21 International revenue
(20% weighting).
• EPS target: Threshold 16.5p to Maximum 21.5p. Achievement of the
Maximum would represent an annualised EPS growth rate of 21.5% from FY18
(assuming constant fully diluted shares)
• International Revenue target: Threshold £46m to Maximum £66 million
• Pay-out levels: below Threshold no pay-out; at Threshold 25% pay-out;
at Maximum 100% pay-out
• The vesting of the awards will also be subject to a further underpin, that the vesting
reflects the underlying financial performance of the Group over the performing period.
SHAREHOLDER
ALIGNMENT AND RISK
A shareholding requirement of 200% of salary.
Malus and claw-back provisions.
MODIFICATIONS
OR CHANGES TO
REMUNERATION
OR POLICY
No other changes to the policy as set-out in the FY17 Annual Report have been made or
are proposed to be made in the forthcoming FY19 period.
*In FY18 Marc Dench’s maximum annual bonus opportunity and LTIP award was 150% of salary. Two thirds of the
annual bonus being awarded as shares deferred over three years. In FY19 his maximum annual bonus and LTIP award
is 100% of salary.
DIRECTORS ’ REMUNERATION POLICY REPORT
The following section sets out our Directors’ Remuneration Policy (the “Policy”).
The aim of the Policy is to align the interests of Executive Directors with the Group’s strategic vision and the long-term
creation of shareholder value. The Policy is intended to remunerate Executive Directors competitively and appropriately
for effective delivery and allows them to share in this success and the value delivered to shareholders.
EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The table below sets out the elements of Executive Directors’ compensation and how each element operates, as well as the
maximum opportunity of each element and any applicable performance measures.
OPERATION
MAXIMUM OPPORTUNITY
FIXED REMUNERATION
ELEMENT, PURPOSE
& STRATEGIC LINK
BASIC SALARY
To provide a
competitive base
salary for the market
in which the Group
operates to attract
and retain Executive
Directors of a
suitable calibre.
BENEFITS
To provide market
competitive benefits
as part of the total
remuneration
package.
Usually reviewed annually taking account of:
• Group performance
• Role, experience and individual performance
• Competitive salary levels and market forces
• Pay and conditions elsewhere in the Group
Executive Directors currently receive private
medical insurance, company car or allowance,
staff discounts and the right to participate in
the Save As You Earn (SAYE) scheme. Other
benefits may be provided based on individual
circumstances. For example, relocation or
travel expenses.
RETIREMENT
BENEFITS
To provide an
appropriate level of
retirement benefit
(or cash allowance
equivalent).
Executive Directors are eligible to participate
in the Group defined contribution pension
plan. In appropriate circumstances (e.g. if
contributions exceed the annual or lifetime
pension allowance in the UK), Executive
Directors may be permitted to take the benefit
as additional salary instead of contributions.
VARIABLE REMUNERATION
ELEMENT, PURPOSE
& STRATEGIC LINK
OPERATION
ANNUAL BONUS
Rewards performance
against targets which
support the strategic
direction of the Group.
Deferral provides a
retention element
through share
ownership and
direct alignment to
shareholders’ interests.
Awards are based on performance (typically
measured over one year) against targets
determined by the Committee at the start of
the period.
Pay-out levels are determined by the
Committee after the year end. The
Committee has discretion to amend pay-outs
should any formulaic output not reflect their
assessment of performance.
A proportion (normally 50%) of any bonus is
paid in cash with the balance paid in the form
of shares (subject to a de-minimis amount
Increases will normally be in line with the range
of salary increases awarded (in percentage terms)
to other Group employees. Increases above
this level may be awarded to take account of
individual circumstances, such as:
• Promotion
• Change in scope or increase in responsibilities
• An individual’s development or performance in role
• Alignment with the market over time
• A change in the size or complexity of the business
Whilst the Committee has not set a maximum
level of benefits that Executive Directors may
receive, the value of benefits is set at a level
which the Committee considers appropriate,
taking into account market practice and
individual circumstances.
The contribution level for FY19 is set at 5%
of salary (there is an overall limit of up to 10%
of salary).
MAXIMUM OPPORTUNITY AND
PERFORMANCE METRICS
Overall maximum is up to 150% of base salary
under the Policy. However, the maximum bonus
opportunity for FY19 is capped at 100% of salary.
Performance measure: Targets are set annually
and aligned with key financial, strategic and/or
individual targets with the weightings between
these measures determined by the Committee
each year considering the Group’s priorities at
the time.
The FY19 bonus is based on a PBT target.
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VARIABLE REMUNERATION CONTINUED
ELEMENT, PURPOSE
& STRATEGIC LINK
OPERATION
MAXIMUM OPPORTUNITY AND
PERFORMANCE METRICS
LONG-TERM
INCENTIVE (‘LTIP’)
To create alignment
between the
interests of
Executive Directors
and shareholders
through the delivery
of performance-
based awards in
Group shares.
of £10,000) usually deferred for three years.
Awards may include dividend equivalents
earned between the grant and vesting date.
Awards can be made over conditional shares
or nil cost options (or cash equivalent).
Vesting is subject to the achievement of
specified performance conditions normally
over three years.
Awards may include dividend equivalents
earned between grant and vesting date.
Awards may be structured as Qualifying LTIP
awards comprising of a HMRC tax-qualifying
option and an LTIP award, with the vesting
of the LTIP award scaled back to take account
of any gain made on the exercise of the tax-
qualifying option.
Overall maximum is up to 150% of base salary under
the Policy. However, the maximum LTIP 2018 award
is capped at 100% of salary.
Where an award is structured as a Qualifying LTIP,
the shares subject to the tax-qualifying option
element are excluded for the purposes of this limit,
reflecting the scale back.
Performance measure: Set to reflect longer term
strategy and business performance. Performance
measures and their weighting are reviewed annually
to maintain appropriateness and relevance.
For threshold levels of performance 25% of the award
will vest rising to 100% for maximum performance.
Below threshold the award will not vest.
The LTIP 2018 awards are subject to stretching
targets with 80% of award based on EPS and 20%
based on international revenue, with an additional
underpin applying to the whole award.
INFORMATION SUPPORTING THE POLICY TABLE
EXPLANATION OF PERFORMANCE MEASURES CHOSEN
Performance measures for the annual bonus and long-term
incentive are selected that reflect the Group’s strategy.
Stretching performance targets are set each year by the
Committee, considering several different factors.
For FY19, the annual bonus is based on PBT. Stretch
targets for the maximum awards under the bonus are set
against outperformance of internal company forecasts.
The performance measure for the LTIP 2018 grant is
underlying diluted Earnings Per Share (EPS) (80% of
award weighting) and international revenue (20% of
award weighting). The Committee considers EPS to be
the key measure of sustainable business performance and
international revenue growth to be a key strategic priority.
The vesting of the awards will also be subject to a further
underpin, that the vesting reflects the underlying financial
performance of the Group over the performance period.
The Committee retains the discretion to adjust or set
different performance measures or targets where it
considers it appropriate to do so (for example, to reflect
a change in strategy, a material acquisition and/or a
divestment of a Group business or change in prevailing
market conditions and to assess performance on a fair and
consistent basis from year to year). Awards and optionsmay
be adjusted in the event of a variation of share capital in
accordance with the rules of the LTIP.
APPLICATION OF MALUS AND CLAWBACK
For up to three years following the payment of an annual
bonus award (and two years after the vesting of an LTIP
award), the Committee may require the repayment of all or
some of the award if there is corporate failure, a material
error or misstatement of the financial results, gross
misconduct or if information comes to light which, had it
been known, would have affected a decision as to the extent
to which an award would have vested.
The Committee also has the right to reduce, cancel or
impose further restrictions on unvested LTIP and deferred
bonus shares in similar circumstances (including material
failure of risk management).
SHAREHOLDING GUIDELINES
To promote further alignment to shareholders interests and
share ownership, each Executive Director is required to
build and maintain a shareholding equal to two times the
value of their annual base salary. Until this guideline is met
Executive Directors will be required to retain half of any
shares which vest under the deferred bonus or LTIP (after
sales to cover tax).
LEGACY REMUNERATION
The Committee has the right to settle remuneration
arrangements that were put in place prior to this Policy
being created and in respect of remuneration awarded to
individuals prior to becoming an Executive Director (and
which was not awarded in anticipation of becoming an
Executive Director).
NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICY
The remuneration Policy for the Chairman and Non-Executive Directors is to pay fees necessary to attract the individual of
the calibre required, taking into consideration the size and complexity of the business and the time commitment of the role,
without paying more than is necessary. Details are set out in the table below:
APPROACH TO
SET TING FEES
BASIS OF FEES
• The fees of the Non-Executive Directors are agreed by the Chairman and CEO and the fees for the
Chairman are determined by the Board as a whole
• Fees are set taking into account the level of responsibility, relevant experience and specialist
knowledge of each Non-Executive Director and fees at companies of a similar size and complexity
• Non-Executive Directors are paid a basic fee for membership of the Board with additional fees
being paid for chairmanship of Board Committees
• Additional fees may also be paid for other Board responsibilities or roles
• Fees are normally paid in cash
OTHER
• Non-Executive Directors may be eligible to receive benefits such as travel and other expenses
• Neither the Chairman nor any of the Non-Executive Directors are eligible to participate in any
of the Group’s incentive arrangements
APPROACH TO RECRUITMENT REMUNERATION
The Policy aims to facilitate the appointment of individuals of sufficient calibre to lead the business and execute the strategy
effectively for the benefit of shareholders. When appointing a new Executive Director the Committee seeks to ensure that
arrangements are in the best interests of the Group and not to pay more than is appropriate. The Committee will take into
consideration relevant factors, which may include the calibre of the individual, their existing remuneration package, and
their specific circumstance, including the jurisdiction from which they are recruited.
The Committee will typically seek to align the remuneration package with the Group’s remuneration Policy. The Committee
may make payments or awards to recognise or ‘buy-out’ remuneration packages forfeited on leaving a previous employer.
The Committee’s intention is that such awards would be made on a ‘like-for-like’ basis as those forfeited.
The remuneration package for a newly appointed Chairman or Non-Executive Director will normally be in line with the
structure set out in the Non-Executive Directors’ Remuneration Policy.
SERVICE CONTRACTS
Each of the Executive Directors has a service contract with
the Group. The notice period of Executive Directors’ service
will not exceed 12 months. All Non-Executive Directors have
initial fixed term agreements with the Group for no more
than three years. Details of the Directors’ service contracts,
are set out below:
NAME
COMMENCEMENT
NOTICE PERIOD
Tom Joule
Colin Porter
Marc Dench
Neil McCausland*
Jill Little
David Stead
20 May 2016
20 May 2016
20 May 2016
20 May 2016
20 May 2016
20 May 2016
12 months
12 months
6 months
1 month
1 month
1 month
*On 22 May 2018, it was announced that Neil McCausland had
notified the Board that he intended to retire as Non-Executive
Chairman effective from 31 July 2018 and that Ian Filby had
been appointed as Non-Executive Chairman commencing on 1
August 2018. Ian Filby’s notice period is three months.
PAYMENTS FOR LOSS OF OFFICE
Payments for loss of office will be in line with the provisions
of the Executive Directors’ service contracts and the
rules of the share plans (as set out in the IPO Admission
document). Where a buy-out award is made then the leaver
provisions would be determined at the time of the award.
In appropriate circumstances, payments may also be made
in respect of accrued holiday, outplacement, legal fees
and under the terms of the SAYE plan. The Committee
reserves the right to make additional payments where such
payments are made in good faith in discharge of an existing
legal obligation (or by way of damages for breach of such
an obligation) or by way of settlement or compromise or
any claim arising in connection with the termination of the
Director’s office or employment.
Where the Committee retains discretion, it will be used
to provide flexibility in certain situations, considering the
circumstances of the Director’s departure and performance.
There is no entitlement to any compensation in the event of
Non-Executive Directors’ contracts not being renewed or the
agreement terminating earlier.
48 D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T 49
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
C O N T I N U E D
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
C O N T I N U E D
CONSULTATION WITH SHAREHOLDERS
The Committee will consider shareholder feedback received on remuneration matters including issues raised at the AGM as
well as any additional comments received during any other meeting with shareholders. The Committee will seek to engage
directly with major shareholders and their representative bodies should any material changes be made to the Policy.
ANNUAL REPORT ON REMUNERATION
SINGLE TOTAL FIGURE OF REMUNERATION
The tables below detail the total remuneration earned by each Director in respect of FY18 and FY17.
FY18
Executive Directors
Tom Joule
Colin Porter
Marc Dench
Non-Executive Directors
Neil McCausland
Jill Little
David Stead
Total
FY17
Executive Directors
Tom Joule
Colin Porter
Marc Dench
Non-Executive Directors
Neil McCausland
Jill Little
David Stead
Total
SALARIES/FEES
£000
TAXABLE BENEFITS
£000
PENSION
£000
ANNUAL BONUS
(INCLUDING DEFERRED
BONUS) £000
TOTAL
REMUNERATION
£000
335.0
345.0
257.5
85.0
50.0
55.0
21.1
22.6
14.7
-
-
-
16.8
17.3
16.2
-
-
-
333.4
343.2
384.3
-
-
-
706.2
728.1
672.7
85.0
50.0
55.0
1,127.5
58.4
50.2
1,060.9
2,297.0
SALARIES/FEES
£000
TAXABLE BENEFITS
£000
PENSION
£000
ANNUAL BONUS
(INCLUDING DEFERRED
BONUS) £000
TOTAL
REMUNERATION
£000
335.0
345.0
235.0
75.0
50.0
55.0
35.5
22.6
12.0
-
-
-
16.8
17.3
11.8
-
-
-
332.3
337.1
339.5
-
-
-
719.6
722.0
598.3
75.0
50.0
55.0
1,095.0
70.1
45.9
1,008.9
2,219.9
BASE SALARIES
The base salaries for the Executive Directors will normally be reviewed with effect from December.
EXECUTIVE DIRECTOR
BASE SALARY AT 1 DECEMBER 2017
BASE SALARY AT 1 DECEMBER 2016
Tom Joule
Colin Porter
Marc Dench
£335,000
£345,000
£265,000
£335,000
£345,000
£250,000
The base salary for Colin Porter and Tom Joule is unchanged. The base salary for Marc Dench was increased with effect
from 1 December 2017 taking into account his performance, development in role and contribution since he joined the
business in 2015 and the competitiveness of his package against the market.
TAXABLE BENEFITS
The taxable benefits for the Executive Directors included a company car or car allowance, private fuel, clothing allowance
and private medical insurance.
ANNUAL BONUS
For FY18 the maximum annual bonus opportunity for the Executive Directors was 100% of salary (and 150% of salary
for Marc Dench, with one third of award paid in cash and two thirds as shares deferred for three years) subject to the
achievement of stretching PBT performance targets.
The structure and targets for the FY18 annual bonus, that were established at the start of the year, are set out in the
following table. Below the Threshold level no annual bonus is payable, between each level the annual bonus award
percentage increases on a linear basis.
LEVEL
% of maximum award
Underlying PBT
THRESHOLD
25%
£11.21 million
TARGET
50%
£11.80 million
MAXIMUM
100%
£12.98 million
Based on FY18 underlying PBT of £12.968 million the Executive Directors will receive 99.5% of their maximum annual
bonus opportunity. The values of each Executive Directors’ annual bonus paid in cash and paid in deferred into shares (for
three years) were as follows:
CASH PAYMENT £000
DEFERRED INTO SHARES £000
TOTAL ANNUAL BONUS SHOWN IN SINGLE
FIGURE TABLE ABOVE FOR FY18 £000
Tom Joule*
Colin Porter
Marc Dench
166.7
171.6
126.8
166.7
171.6
257.5
333.4
343.2
384.3
For FY19 the annual bonus opportunity will be up to a maximum of 100% of salary. The annual bonus is subject to the
achievement of stretching PBT performance targets, with payment made half in cash and half deferred into shares (vesting
after a further three years).
The Committee considers PBT to be the key short term financial measure. The actual FY19 annual bonus targets are not
disclosed due to commercial confidentiality reasons but the PBT target will be disclosed when we report the performance
out-turn in the FY19 Directors’ Remuneration Report.
LONG-TERM INCENTIVES
There were no LTIP awards due to vest in respect of the year ended 27 May 2018.
In FY18, the Committee granted LTIP awards as set out in the table below. The share price used to calculate the awards
was £3.14, being the closing share price on the day immediately preceding the awards.
LTIP 2017
Tom Joule
Colin Porter
Marc Dench
DATE OF GRANT
18 August 2017
18 August 2017
18 August 2017
% OF SALARY
NUMBER OF SHARES
100%
100%
150%
106,858
110,048
119,617
Vesting of the awards will be based upon achievement against two targets. 80% of the awards will be subject to underlying
diluted Earnings Per Shares (EPS) delivered in the final year of the performance period (FY20) and 20% subject to
international revenue delivered in the final year of the performance period FY20. Vesting is determined on a straight-line
basis between the target ranges. The target ranges are summarised below.
EPS TARGET (80%)
VESTING %
FY20 TARGET
INTERNATIONAL REVENUE
TARGET (20%)
Threshold
Maximum
25%
100%
14.0 pence
18.0 pence
Threshold
Maximum
VESTING %
FY20 TARGET
25%
100%
£36.0 million
£46.0 million
For FY19, the Committee intends to grant LTIP awards as set out in the table below.
LTIP 2018
Tom Joule*
Colin Porter
Marc Dench
% OF SALARY
100%
100%
100%
*Because Tom Joule’s existing shareholding in the business is greater than 30%, the deferred share award to be granted
to Tom Joule will be conditional on approval of a separate resolution at the AGM in relation to Rule 9 of the Takeover Code.
50 D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T 51
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
C O N T I N U E D
D I R E C TO R S ’ R E M U N E R AT I O N R E P O R T
C O N T I N U E D
Vesting of the awards will be based upon the amount of the adjusted diluted Earnings Per Share (EPS) and the level of
international revenue delivered in the final Financial Year of the three-year performance period (FY21).
• EPS target (80% of award): Below the threshold vesting target of 16.5 pence, none of the award will vest. 25% of the award
will vest if underlying diluted EPS is 16.5 pence, with 100% vesting at 21.5 pence and vesting determined on a straight-
line basis between these figures.
• International revenue target (20% of award): Below the threshold vesting target of £46 million, none of the award will
vest. 25% of the award will vest if international revenue is £46 million, with 100% vesting at £66 million. Vesting is
determined on a straight-line basis between these figures.
EPS TARGET (80%)
VESTING %
FY21 TARGET
INTERNATIONAL REVENUE
TARGET (20%)
Threshold
Maximum
25%
100%
16.5 pence
21.5 pence
Threshold
Maximum
VESTING %
FY21 TARGET
25%
100%
£46.0 million
£66.0 million
EPS is the most suitable performance measure for the Group supporting a focus on profitability and growth and has
therefore been chosen as the primary LTIP metric.
NON-EXECUTIVE DIRECTOR FEES
Details of Non-executive Directors’ fees for FY19 are set out below:
• Chairman’s fee: £85,000, increasing to £120,000 from 1 August 2018
• Non-executive director fee: £50,000 for David Stead and £45,000 for Jill Little
• Additional fee for chair of a Board Committee: £5,000
During the year the Chairman’s fee, which incorporates the fee for chairing the Nomination Committee, was reviewed and
increased from £75,000 to £85,000. Following the appointment of Ian Filby as Non-Executive Chairman, commencing 1
August 2018, the Chairman’s fee will be increased to £120,000.
PAYMENTS MADE TO FORMER DIRECTORS DURING THE YEAR
No payments were made in the year to any former Director of the Group.
PAYMENTS FOR LOSS OF OFFICE MADE DURING THE YEAR
No payments for loss of office were made in the year to any Director of the Group.
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS
The interests of the Directors and their immediate families in the Group’s ordinary shares as at 27 May 2018 were as follows.
OUTSTANDING DIRECTORS’ SHARE AWARDS
Each Executive Director holds awards under the Company’s LTIP, Deferred Bonus Plan (DBP),
SAYE Scheme and Executive Share Option Scheme (ESOS) as follows.
DIRECTOR
SHARE PLAN
DATE OF GRANT
Tom Joule
LTIP 2017
18 August 2017
DBP FY17
18 August 2017
LTIP 2016
6 July 2016
Colin Porter
LTIP 2017
18 August 2017
DBP FY17
18 August 2017
LTIP 20161
6 July 2016
Marc Dench
LTIP 2017
18 August 2017
DBP FY17
18 August 2017
LTIP 20161
6 July 2016
DBP FY16
14 July 2016
ESOS
26 May 2016
SHARE PRICE
AT GRANT
EXERCISE
PRICE
NUMBER OF
SHARES/
OPTION AWARD
PERFORMANCE PERIOD VESTING DATE
£3.14
£3.14
£1.72
£3.14
£3.14
£1.72
£3.14
£3.14
£1.72
£1.66
£1.60
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£1.60
106,858
Three years to end of FY20
24 July 2020
51,455
-
24 July 2020
194,767
Three years to end of FY19
6 July 2019
110,048
Three years to end of FY20
24 July 2020
52,990
-
24 July 2020
200,581
Three years to end of FY19
6 July 2019
119,617
Three years to end of FY20
24 July 2020
54,142
-
24 July 2020
191,860
Three years to end of FY19
6 July 2019
132,132
312,500
-
-
14 July 2019
26 May 2018
1Colin Porter and Marc Dench also received tax qualifying options of up to a maximum of £30,000, which were granted under
the Tax Qualifying LTIP, and subject to the same performance conditions as the LTIP award. The tax qualifying options have
an exercise price of £1.72 per share (being the market value on the date of grant). The vesting of the LTIP award will be scaled
back to take account of any gain made under the tax qualifying option.
REMUNERATION COMMIT TEE
The members of the Committee are Jill Little (Chair), Neil McCausland and David Stead. The Group’s General Counsel
attends the meeting as secretary to the Committee. The Committee meets at least once a year and has responsibility for:
• Maintaining the remuneration policy;
• Reviewing and determining the remuneration packages of the Executive Directors;
• Monitoring the level and structure of the remuneration of Senior Management; and
• Production of the annual report on Directors’ remuneration
The Chief Executive Officer and Chief Financial Officer occasionally attend meetings and provide information and support
as requested. Neither Executive Director is present when his remuneration package is considered.
BENEFICIALLY OWNED
AT 28 MAY 2017
NO. OF SHARES
BENEFICIALLY OWNED
AT 27 MAY 2018
NO. OF SHARES
SHAREHOLDING
GUIDELINES
MET
UNVESTED OUTSTANDING
SHARE AWARDS AT 27 MAY
2018 NO. OF SHARES*
VESTED, UNEXERCISED
SHARE AWARDS AT 27
MAY 2018 NO. OF SHARES
The duties of the Remuneration Committee are set out in its Terms of Reference, which are available on the Group’s website
(www.joulesgroup.com) and are also available on request from the Company Secretary.
Executive Directors
Tom Joule
Colin Porter
Marc Dench
Non-Executive Directors
28,147,210
2,269,822
82,500
28,147,210
1,519,822
53,263
Neil McCausland
Jill Little
David Stead
625,375
15,625
31,250
475,375
25,625
31,250
Yes
Yes
No
n/a
n/a
n/a
*Includes: ESOP, LTIP, Deferred share awards and SAYE
**ESOP options granted at the time of the IPO with an exercise price of £1.60 per share
353,080
363,619
497,752
-
-
-
-
-
312,500**
-
-
-
The interests of the Directors and their immediate families in the Group’s ordinary shares did not change between
27 May 2018 and the date these accounts were signed on 24 July 2018.
This report was approved by the Board on 24 July 2018 and signed on its behalf by:
JILL LIT TLE
Remuneration Committee Chairman
52 D I R E C TO R S ’ R E P O R T
D I R E C TO R S ’ R E P O R T
J O U L E S G R O U P P LC
DIRECTORS’ REPORT
The Directors present their Annual Report on the affairs
of the Group, together with the financial statements and
Auditors’ Report, for the 52 weeks ended 27 May 2018.
The Governance Framework Section on pages 35 to 37
also forms part of this Directors’ Report.
DIRECTORS
The Directors of the Company during the period under review
were, and subsequently to the date of this report, were:
Neil McCausland
Tom Joule
Colin Porter
Marc Dench
David Stead
Jill Little
RESULTS AND DIVIDENDS
Results for the 52 weeks ended 27 May 2018 are set out
in the Consolidated Income Statement on page 62. The
Directors are recommending a final dividend of 1.3 pence
per share which, if approved, at the AGM will result in a
full year dividend of 2.0 pence per share for FY18.
ARTICLES OF ASSOCIATION
A copy of the full articles of association are available
on request from the Company Secretary and are also
available on the Group’s website www.joulesgroup.com.
Any amendments to the articles of association can be
made by a special resolution of the Shareholders.
SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS
Details of the issued share capital, together with details of
the movements during the year, are shown in Note 18 to the
Consolidated Financial Statements. The Company has one
class of ordinary share and each ordinary share carries the
right to one vote at general meetings of the Company.
At 27 May 2018 the Company had been notified of the
following substantial shareholders comprising 3% or more
of the issued ordinary share capital of the Company:
% OF ISSUED SHARE CAPITAL
Tom Joule
Standard Life
Blackrock
Hargreave Hale
Octopus Investments
Old Mutual Global Investors
Columbia Threadneedle Investments
32.17%
9.87%
7.97%
7.18%
6.03%
5.89%
3.54%
There has been no significant changes to substantial
shareholders since the year end.
ACQUISITION OF THE COMPANY’S OWN SHARES
At the AGM held on 27 September 2017, the Company
was authorised in accordance with section 701 of the Act
to make market purchases (within the meaning of section
693(4) of the Act) of up to 8,750,114 Ordinary Shares (being
approximately 10 per cent of the Share Capital) on such
terms and in such manner as the Directors of the Company
may from time to time determine. This authority was
not used during the year or up to the date of this report.
Shareholders will be asked to renew these authorities at the
AGM as detailed in the next AGM Notice. The Company held
no treasury shares during the year.
DIRECTORS’ INTERESTS
Details of the Directors’ beneficial interests are set out
in the Remuneration Report on pages 41 to 49.
DIRECTORS’ INDEMNITIES AND DIRECTORS
AND OFFICERS’ LIABILITY INSURANCE
The Company has purchased Directors’ and Officers’ liability
insurance during the year as allowed by the Company’s articles.
FINANCIAL RISK MANAGEMENT
Details of the Directors’ assessment of the principal risks
and uncertainties which could impact the business are
outlined in the Principal Risks and Uncertainties section on
pages 24 and 25. The Board manages internal risk through
the on-going review of the Group’s risk register and the
Board manages external risk through the monitoring of the
economic and regulatory environment and market conditions.
GOING CONCERN
The Directors have prepared a detailed forecast with a
supporting business plan for the foreseeable future. The
forecast indicates that the Group will remain in compliance
with covenants throughout the forecast period. As such,
the Directors have a reasonable expectation the Company
and Group will have adequate resources to continue in
operational existence for the foreseeable future. The forecasts
have also been stress tested through scenario analysis and
the Directors remain confident in the validity of the going
concern assumption. As a result, they continue to prepare
the financial statements on the basis of going concern.
VIABILITY STATEMENT
The Directors have also assessed the Group’s prospects and
viability over the three-year period to 30 May 2021. This
three-year assessment period was selected as it corresponds
with the Board’s strategic planning horizon.
In making this assessment, the Directors have taken account
of the Group’s current financial position, annual budget for
the year ending 26 May 2019, three-year plan forecasts and
sensitivity analysis and testing. The Board also considered a
number of other factors, including the Group business model
D I R E C TO R S ’ R E P O R T 53
and strategy, risks and uncertainties and risk management
and internal control effectiveness. While the principal risks
and uncertainties could impact future performance, none
of them is considered likely, individually or collectively, to
affect the viability of the business during the three-year
assessment period. The Group is operationally strong with
a robust balance sheet and has a track record of delivering
profitable and sustainable growth.
Based on this assessment, the Directors have a reasonable
expectation that the Group will continue in operation and
meet all its liabilities as they fall during the period up to
30 May 2021.
POST BALANCE SHEET EVENTS
There have been no material post balance sheet events.
ANNUAL GENERAL MEETING
The Company’s AGM will be held on 27 September 2018.
FUTURE DEVELOPMENTS IN THE BUSINESS
OF THE COMPANY
The Strategic Report on pages 10 to 31 sets out the likely
future developments of the Company.
CHANGE OF CONTROL
So far as the Directors are aware, there are no arrangements
in place that the operation of which at a later date may
result in a change of control of the Company.
BRANCHES OUTSIDE THE UK
In addition to subsidiary companies in USA, China and
Hong Kong, the Group has branches in France, Germany
and the Republic of Ireland.
POLITICAL DONATIONS
No political donations were made during the period under review.
EMPLOYEE INVOLVEMENT
The Directors recognise that communication with the
Group’s employees is essential and the Group places
importance on the contributions and view of its employees.
Details of employee involvement are set out in the Social
Responsibility Report on pages 26 to 31.
DISABLED EMPLOYEES
Details of the Group’s policy in relation to disabled
employees is set out in the Social Responsibility Report
on pages 26 to 31.
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each Director in office at the date the
Directors’ Report is approved, the following applies:
• The Director knows of no information, which would be
relevant to the auditors for the purpose of their audit
report, of which the auditors are not aware; and
• The Director has taken all steps that he/she ought to have
taken as a director to make him/herself aware of any such
information and to establish that the auditors are aware
of it.
AUDITOR
The Auditor, Deloitte LLP, have indicated their willingness
to continue in office and a resolution seeking to re-appoint
them will be proposed at the AGM.
JONATHAN DARGIE
Company Secretary
54 STAT E M E N T O F D I R E C TO R S ’ R E S P O N S I B I L I T I E S
STAT E M E N T O F D I R E C TO R S ’ R E S P O N S I B I L I T I E S
J O U L E S G R O U P P LC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union and Article 4 of the IAS Regulation and have elected
to prepare the parent company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards
and applicable law), including FRS 101 “Reduced Disclosure
Framework”. Under company law the directors must not
approve the accounts unless they are satisfied that they give
a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period.
In preparing the parent company financial statements, the
directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
• state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business
In preparing the group financial statements, International
Accounting Standard 1 requires that directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance; and
• make an assessment of the company’s ability to continue
as a going concern
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with
the relevant financial reporting framework, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the company and the undertakings
included in the consolidation taken as a whole;
• the strategic report includes a fair review of the
development and performance of the business and the
position of the company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face; and
• the annual report and financial statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
company’s position and performance, business model and
strategy
This responsibility statement was approved by the board of
directors on 24 July 2018 and is signed on its behalf by:
MARC DENCH
Chief Financial Officer
24 July 2018
3CHAPTER
CONSOLIDATED
FINANCIAL STATEMENTS
let’s take a walk...
IN A FIELD OF OUR OWN
Our Printed Wellies helped Joules become the brand it is today.
Waterproof and made to withstand any (wet) weather conditions,
they’re handcrafted using hardwearing natural rubber and adorned with
hand-drawn prints. They’ve been standing out from the crowd for years.
AU D I TO R ’S R E P O R T
J O U L E S G R O U P P LC
A U D I TO R ’S R E P O R T 59
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF JOULES GROUP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion:
• the financial statements of Joules Group plc (the ‘parent
company’) and its subsidiaries (the ‘group’) give a true
and fair view of the state of the group’s and of the parent
company’s affairs as at 27 May 2018 and of the group’s
profit for the year then ended;
We are independent of the Group and the parent company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
SUMMARY OF OUR AUDIT APPROACH
• the Group financial statements have been properly
KEY AUDIT MATTERS
prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union
• the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including
Financial Reporting Standard 101 “Reduced Disclosure
Framework”; and
• The financial statements have been prepared in
MATERIALITY
accordance with the requirements of the Companies Act
2006
SCOPING
The key audit matters that we
identified in the current year were:
• Manual adjustments to revenue
including returns provisions.
• Completeness of inventory and
goods in transit.
The materiality that we used for
the group financial statements was
£559,000 which was determined as
5% of statutory profit before taxation.
Our full scope audit procedures
covered the main UK entity which
accounted for 94% of the total
revenue for the group and 96% of the
group’s profit from the group’s profit-
making entities, before consolidation
eliminations. We have undertaken
specific procedures on certain
balances in the group’s overseas
subsidiaries to address specific risks
to the group.
We have audited the financial statements of Joules Group
plc and its subsidiaries which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent statement of financial position;
• the consolidated and parent company statements of
changes in equity;
• the consolidated cash flow statement; and
• the related notes 1 to 35
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and IFRSs as adopted by the European
Union. The financial reporting framework that has
been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of
the financial statements section of our report.
CONCLUSIONS RELATING TO GOING CONCERN
We are required by ISAs (UK) to report in respect of the
following matters where:
• the Directors’ use of the going concern basis of accounting
in preparation of the financial statements is not
appropriate; or
• the Directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
60 A U D I TO R ’S R E P O R T
AU D I TO R ’S R E P O R T
C O N T I N U E D
KEY AUDIT MAT TERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
A U D I TO R ’S R E P O R T 61
COMPLETENESS OF INVENTORY AND GOODS IN TRANSIT (CONTINUED)
KEY OBSERVATIONS
The results of our testing were satisfactory and do not note any material misstatements in relation
to the inventory management or treatment of goods in transit.
OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
MANUAL ADJUSTMENTS TO REVENUE INCLUDING RETURNS PROVISION
MATERIALITY
£559,000
£550,000
DESCRIPTION OF
KEY AUDIT MAT TER
As described in note 1 to the financial statements the Group has different revenue streams that
have separate characteristics. Customers are entitled to return products after purchase for a
defined period of time. The Directors apply estimates in both the retail (stores and e-commerce)
and wholesale business streams, as outlined in note 1, in determining the level of provision that
is required. Returns from the e-commerce business are typically at a higher level than traditional
store retailing which therefore makes the judgements involved more significant in determining the
level of provision, the total returns provision is £767,000 as outlined in note 14.
There is a risk that manual adjustments are made between the underlying EPOS sales system and
the nominal ledger that do not reflect the substance of the sales transaction.
HOW THE SCOPE
OF OUR AUDIT
RESPONDED TO THE
KEY AUDIT MAT TER
We documented and evaluated the design and implementation of controls over the returns provision.
We recalculated the provision for returns and tested the integrity of the data that has been used by
management by agreeing through to underlying supporting evidence.
We traced a sample of transactions to source documentation, in addition we performed an analytical
review of the returns provision based on gross levels of sales as well as comparing with historical
levels of accuracy by assessing the levels of returns against the previous provision.
We reconciled by store from the underlying sales records to the nominal ledger and then
investigated any variances.
KEY OBSERVATIONS
The results of our testing were satisfactory. The key assumptions applied in the returns provision
are appropriate and manual adjustments to the sales details upload that have been processed are
supported by commercial rationale and supporting evidence.
COMPLETENESS OF INVENTORY AND GOODS IN TRANSIT
DESCRIPTION OF
KEY AUDIT MAT TER
The group has significant inventory movement from its UK stores and overseas subsidiaries to and
from both its distribution centre and its supply chain. Such goods are often in transit at a period
end which requires them to be accounted for accurately depending on the terms of their purchase.
At the year end there were £10.4m of goods in transit as shown in note 10. The group should
recognise inventory when the risks and rewards transfer to the group; which can often be when
they are in transit.
HOW THE SCOPE
OF OUR AUDIT
RESPONDED TO THE
KEY AUDIT MAT TER
We documented and evaluated the design and implementation of the control process executed by
management to assess the monitoring of negative inventory balances and inventory monitoring.
We have verified that items that have been checked out of store inventory had been correctly
recognised at the distribution centre.
We reviewed inventory ledgers by stock keeping unit (“SKU”) by location highlighting negative
inventory balances which could indicate inventory unaccounted for which is in transit. Negative
balances were then investigated.
We reviewed purchases made before the period end and checked that the goods on the water have
been recognised in inventory where appropriate.
For a sample of inventory suppliers, we obtained third party confirmation with the corresponding
reconciliations from management and ensured all goods in transit had been suitably accrued.
BASIS FOR DETERMINING
MATERIALITY
5% of statutory profit before tax.
RATIONALE FOR THE
BENCHMARK APPLIED
We have assessed that the use of profit before
tax is the most appropriate measure upon
which to base materiality as this continues
to be a key driver of the business’s value, is a
critical component of the financial statements
and a key metric that management use to
monitor the performance of the business and
communicate this to shareholders.
The Parent Company’s materiality is based on
3% of its net assets, but adjusted to take into
consideration Group materiality.
We have assessed the use of the net asset
balance to be appropriate as the parent company
acts as a holding company for the group’s
operations and as such the value of its net
assets is the key financial metric.
We agreed with the Audit Committee that we would report
all audit differences in excess of £27,950 for the group, as
well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the
financial statements.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our full scope audit procedures covered the main UK entity
and the parent company. As the overseas subsidiaries act
as distribution channels for the UK entity these were not
deemed to be significant components. The main UK trading
entity, Joules Limited contributes 94% of the group’s total
revenue and generates 96% of the group’s profit from profit-
making entities, before consolidation eliminations and 96%
of the group’s net assets before consolidation eliminations.
Due to the nature of the group we have undertaken
specific procedures on certain balances within the overseas
components, specifically in relation to the entities in Hong
Kong, China and USA. Audit work to respond to the risks of
material misstatement was performed directly by the group
audit engagement team. The specific testing conducted on
these balances was undertaken at a component materiality
that was 40% of the group’s materiality.
The range of component materialities used was between 40%
and 97.5% of that of the group being £224,000 and £550,000.
conclusion that there were no significant risks of material
misstatement of the aggregated financial information of
the remaining components not subject to audit or audit of
specified balances.
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information included
in the annual report other than the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
At the parent company level we also tested the consolidation
process and carried out analytical procedures to confirm our
We have nothing to report in respect of these matters.
62 A U D I TO R ’S R E P O R T
AU D I TO R ’S R E P O R T
C O N T I N U E D
A U D I TO R ’S R E P O R T 63
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the statement of directors’
responsibilities, the directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either
intend to liquidate the Group or the parent company or to
cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
OPINIONS ON OTHER MAT TERS PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course
of the audit:
• the information given in the strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
• the strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements
In the light of the knowledge and understanding of the
group and or the parent company and their environment
obtained in the course of the audit, we have not identified
any material misstatements in the strategic report or the
Directors’ report.
MAT TERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we have not received all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns
We have nothing to report in respect of these matters.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
DIRECTORS’ REMUNERATION
Under the Companies Act 2006 we are also required to
report if in our opinion certain disclosures of Directors’
remuneration have not been made.
USE OF OUR REPORT
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
We have nothing to report in respect of this matter.
ANDREW HALLS FCA
Senior statutory auditor
For and on behalf of Deloitte LLP
Statutory Auditor
Nottingham, UK
24 July 2018
64 C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
C O N S O L I DAT E D I N C O M E S TAT E M E N T
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C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 65
C O N S O L I DAT E D STAT E M E N T
O F F I N A N C I A L P O S I T I O N
J O U L E S G R O U P P LC
REVENUE
Cost of sales
GROSS PROFIT
Administrative expenses
Share based payments
Non-recurring administrative expenses
Total administrative expenses
OPERATING PROFIT
Finance costs
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE PERIOD
Basic earnings per share (pence)
Diluted earnings per share (pence)
C O N S O L I DAT E D STAT E M E N T
O F C O M P R E H E N S I V E I N C O M E
J O U L E S G R O U P P LC
PROFIT FOR THE PERIOD
Items that may be reclassified subsequently to profit or loss:
Net loss arising on changes in fair value of hedging
instruments entered into for cash flow hedges
Gains arising during the period on deferred tax on cash flow hedges
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translation of foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
N O T E
2
5
5
26
5
6
7
25
25
N O T E
20
20
20
52 W KS E N D E D
52 W KS E N D E D
27 M AY 2018
28 M AY 2017
£’000
185,933
(82,403)
103,530
(90,226)
(1,766)
-
£’000
157,032
(69,981)
87,051
(76,729)
(829)
(341)
(91,992)
(77,899)
11,538
(348)
11,190
(2,564)
8,626
9.86
9.74
9,152
(241)
8,911
(2,568)
6,343
7.25
7.22
52 W KS E N D E D
52 W KS E N D E D
27 M AY 2 018
28 M AY 2017
£’000
8,626
(308)
31
(277)
422
8,771
£ ’00 0
6,343
(640)
112
(528)
11
5,826
NON-CURRENT ASSETS
Property, plant and equipment
Intangibles
Deferred tax
Derivative financial instruments
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
Derivative financial instruments
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Current corporation tax payable
Borrowings
Provisions
Derivative financial instruments
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Derivative financial instruments
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITIES
Share capital
Hedging reserve
Translation reserve
Merger reserve
Retained earnings
Share premium
TOTAL EQUITY
27 M AY 2018
28 M AY 2017
N O T E
£’000
£’000
8
9
17
11
10
12
21
11
13
15
14
11
15
11
18
20
20
19
19
19
18,049
12,614
1,148
428
32,239
32,795
16,456
8,571
910
58,732
90,971
40,008
1,355
5,559
1,031
1,680
11,646
9,499
612
117
21,874
21,194
14,013
6,964
1,228
43,399
65,273
32,256
1,018
333
636
951
49,633
35,194
2,972
-
2,972
52,605
38,366
875
(277)
361
294
551
845
36,039
29,234
875
(139)
(61)
(125,807)
(125,807)
151,804
142,956
11,410
38,366
11,410
29,234
These financial statements of Joules Group plc (Company Registration Number 10164829) were approved by the
Board of Directors and authorised for issue on 24 July 2018 and were signed on behalf of the Board of Directors by -
MARC DENCH
Chief Financial Officer
24 July 2018
66 C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
C O N S O L I DAT E D STAT E M E N T
O F C H A N G E S I N E Q U I T Y
J O U L E S G R O U P P LC
C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 67
C O N S O L I DAT E D C AS H F LO W STAT E M E N T
J O U L E S G R O U P P LC
MERGER
HED GI N G
T RAN S L AT I ON
S HARE
S HARE
RE TA IN ED
TOTAL
RESERVE
RE SE RV E
RE SE RV E
CAPI TAL
PR EMI U M
EA RN IN GS
EQUIT Y
£’000
£’ 000
£’ 000
£’ 000
£ ’0 00
£ ’0 00
£’ 000
Cash generated from operations
PROFIT FOR THE PERIOD
N O T E
52 W KS E N D E D
27 M AY 2018
£’000
52 W KS E N D E D
28 M AY 2017
£’000
8,626
6,343
BALANCE AT 29 MAY 2016
(125,807)
Profit for the period
Other comprehensive
income for the period
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD
Dividends Issued (note 27)
Shares issued (note 26)
Credit to equity for equity-settled
share based payments excl. NI
(note 26)
Gains arising during the period
on deferred tax on share based
payments
-
-
-
-
-
-
-
389
-
(528)
(528)
-
-
-
-
BALANCE AT 28 MAY 2017
(125,807)
(139)
Profit for the period
Other comprehensive income for
the period
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD
Basis adjustment to hedged
inventory
Dividends Issued (note 27)
Shares issued (note 26)
Credit to equity for equity-settled
share based payments excl. NI
(note 26)
Gains arising during the period
on deferred tax on share based
payments
-
-
-
-
-
-
-
-
-
(277)
(277)
139
-
-
-
-
(72)
-
11
11
-
-
-
-
(61)
-
422
422
-
-
-
-
-
875
11,410
136,224
23,019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,343
6,343
-
(517)
6,343
(525)
5,826
(525)
-
-
737
737
177
177
875
11,410
142,956
29,234
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,626
8,626
-
145
8,626
8,771
-
139
(1,663)
(1,663)
-
-
1,595
1,595
290
290
BALANCE AT 27 MAY 2018
(125,807)
(277)
361
875
11,410
151,804
38,366
Adjustments for:
Depreciation
Amortisation
Share based payments
Finance expense
Tax expense
8
9
26
OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING CAPITAL
Increase in inventory (including settlement of derivatives)
Increase in receivables
Increase in payables
CASH GENERATED BY OPERATIONS
Interest paid
Tax paid
NET CASH FROM OPERATING ACTIVITIES
Cash flow from investing activities
Purchase of property, plant and equipment and intangible assets
8/9
NET CASH FROM INVESTING ACTIVITIES
Cash flow from financing activities
Repayment of borrowings
Proceeds from borrowings
Dividend paid
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT END OF PERIOD
22
22
27
22
21
6,360
1,453
1,766
348
2,564
21,117
(11,601)
(2,443)
8,105
15,178
(308)
(2,227)
12,643
(17,228)
(17,228)
(596)
8,500
(1,663)
6,241
1,656
6,964
(49)
8,571
4,920
1,688
829
241
2,568
16,589
(1,941)
(3,157)
4,108
15,599
(241)
(997)
14,361
(10,700)
(10,700)
(5,461)
-
(525)
(5,986)
(2,325)
9,278
11
6,964
68 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 69
N OT E S TO T H E C O N S O L I DAT E D
F I N A N C I A L STAT E M E N TS
J O U L E S G R O U P P LC
1. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The particular accounting policies adopted and applied are described below.
The Group financial statements comprise the financial information of the parent undertaking and its subsidiary undertakings.
Joules Group plc is a public company limited by shares whose principal activities are the design and sale of lifestyle
clothing, related accessories and a homeware range, through the multi-channel business structure embracing retail
stores, e-commerce, county shows and events and wholesale. The company’s registered office is Joules Building, The Point,
Rockingham Road, Market Harborough, Leicestershire, LE16 7QU.
For the year ended 27 May 2018 the following subsidiaries of the Company were entitled to exemption from audit under
s479A of the Companies Act 2006 relating to subsidiary companies.
Subsidiary name
Joules Investments Holdings Limited
Joules Limited
Companies House registration number
08752970
02934327
(IFRSs) Application of new and revised International Financial Reporting Standards (IFRSs)
Adoption of new and revised standards
There have been no new IFRSs adopted in the current year which have impacted the Group’s financial statements,
with the exception of IAS 7 which has been incorporated in to these financial statements.
• IFRS 15 Revenue from contracts with customers: The new impairment model requires the recognition of impairment
provisions based on expected credit losses (‘ECL’) rather than only incurred credit losses as is the case under IAS
39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other
comprehensive income, contract assets under IFRS 15 “Revenue from Contracts with Customers”, lease receivables, loan
commitments and certain financial guarantee contracts. Many of these categories are not applicable to Joules. Based
on the assessments undertaken to date, the Group does not expect any material increase in the loss allowance for trade
debtors. The new standard also introduces expanded disclosure requirements and changes in presentation. These are
expected to change the nature and extent of the Group’s disclosures about its financial instruments, particularly in the
year of the adoption of the new standard.
• IFRS 16 Leases: will have a material impact on the reported assets, liabilities and income statement for the Group.
The standard will be applied for accounting periods starting after 1 January 2019, therefore the Group’s first financial
year that is impacted will be the year ending 31st May 2020. IFRS16 requires operating leases to be capitalised on the
statement of financial position. The Directors have performed a review of the effect of IFRS 16 on the Group and the
indicative impact is to increase fixed assets by approximately £58 million at 27 May 2018, being the present value of
future lease obligations with a corresponding increase in liabilities of £58 million. Profit before tax, in FY18, would have
a marginal reduction of approximately £0.4 million as the result of the imputed finance charge on the lease liability, this
impact reverses as the average lease lengths mature. The cash flow impact is nil.
Basis of preparation
The financial statements have been prepared on the historical cost basis, except for certain financial assets and liabilities
that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement,
which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access
at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been
applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
• Level 3 inputs are unobservable inputs for the asset or liability
IFRS 1 (amendments)
IFRS 2 (amendments)
IFRS 4 (amendments)
IFRS 9
IFRS 15
IFRS 16
IFRS 17
IAS 19 (amendments)
IAS 28 (amendments)
IAS 40 (amendments)
Annual improvements
Share-based payment
Insurance contracts
Financial instruments
Revenue from contracts with customers
Leases
Insurance contracts
Plan Amendment, Curtailment or Settlement
Annual improvements
Investment properties
The Directors have considered the impact of the adoption of the Standards and Interpretations listed above and have come
to the following assessment;
• IFRS 9 Financial Instruments: The standard is applicable to financial assets and financial liabilities, and covers the
classification, measurement, impairment and derecognition of financial assets and financial liabilities together with
introducing new rules for hedge accounting and a new impairment model for financial assets. The Group has reviewed
its financial assets and liabilities and does not expect the new guidance to affect their classification and measurement.
The key change for the Group is around the documentation of policies, hedging strategy and new hedge documentation.
The new hedge accounting rules will align the accounting for hedging instruments more closely with the Group’s risk
management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard
introduces a more principles-based approach. The Group has confirmed that its current hedge relationships will qualify as
continuing hedges upon the adoption of IFRS 9 and updated hedge documentation is in place from 28 May 2018.
The preparation of financial statements in conformity with International Financial Reporting Standards adopted by the
European Union requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Although these estimates are based on management’s best knowledge of current
events and actions, actual results ultimately may differ from those estimates.
The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.
Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an
investee are sufficient to give it power over the entity.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company
loses control of the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
70 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 71
Going concern
The Directors have prepared a detailed forecast with a supporting business plan for the foreseeable future. The forecast
indicates that the Group will remain in compliance with covenants throughout the forecast period. As such, the Directors
have a reasonable expectation the Company and Group will have adequate resources to continue in operational existence
for the foreseeable future. As such, they continue to prepare the financial statements on the basis of going concern.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses.
Revenue recognition
Derecognition of intangible assets
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recorded excluding Value
Added Tax and is reduced for actual and estimated customer returns, discounts, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered, titles have passed and the amount of revenue can
be measured reliably:
• Retail revenue is recognised when a Group entity sells a product to a customer.
The Group sells retail products with the right to return and experience is used to estimate and provide for the value of
such returns at the time the sale is made.
• Wholesale revenue is recognised when title has passed in accordance with the individual terms of trade.
• Licensing income receivable from licensees is accrued as earned based on the relevant licence agreement terms.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services or for administrative purposes, are stated in
the statement of financial position at their fair value, being the deemed cost at the date of revaluation, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held
under a finance lease term, whichever is the shorter.
Land and Buildings
Leasehold improvements
Fixtures and fittings
Motor vehicles
- Buildings straight line over 25 years, Land non-depreciating
- straight line over the lease period, typically 5-10 years
- straight line over 3 - 5 years
- straight line over 4 years
Useful lives are reviewed annually and carrying values adjusted in line with third party valuations where appropriate.
Intangible assets
IT systems
Software and IT represent computer systems and processes used by the Group in order to generate future economic value
through normal business operations. The underlying assets are amortised over the period from which the Group expects to
benefit, which is typically between three to eight years. The new ERP system will be depreciated over eight years.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.
Impairment of tangible and intangible assets
At each statement of financial position date, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
Inventories
Inventory is carried in the financial statements at the lower of cost and net realisable value. Cost includes product purchase
price and associated inward transportation costs. Net realisable value is based on estimated selling price less further costs
incurred to disposal.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Intangible assets acquired separately
Deferred tax
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Internally-generated intangible assets
An internally-generated intangible asset arising from development (or from the development phase of an internal project)
is recognised if, and only if, all of the following have been demonstrated:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are recognised for taxable temporary differences associated with investments in subsidiaries,
following the relevant accounting for utilising temporary differences.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates and tax laws enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
72 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 73
Current and deferred tax for the year
Financial instruments
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.
Foreign currencies
Transactions entered into by the Group entities in a currency other than the currency of the primary economic environment
in which they operate (their “functional currency”) are recorded at the rates ruling when the transaction occur. Foreign
currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated
statement of comprehensive income. The assets and liabilities of overseas subsidiaries denominated in a foreign currency,
including fair value adjustments arising on consolidation, are translated at foreign exchange rates ruling at the balance
sheet date. The revenues and expenses of overseas subsidiaries are translated into sterling using average foreign exchange
rates ruling at the date of transaction. Foreign exchange differences arising on retranslation are recognised in the
retranslation reserve in equity.
Hire purchase and leasing commitments (Leasing)
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
The Group as lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included
in the consolidated statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability. Contingent rentals are recognised as expenses in the periods in
which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Certain rental expenses
are determined on the basis of revenue achieved in specific retail locations and accrued for on that basis.
Pensions
The Group operates a defined contribution pension scheme. Contributions payable for the period are recognised as an
expense when employees have rendered service entitling them to the contributions.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation, net of any third-party recoveries that can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Returns provision
Present obligations arising under sales returns are recognised and measured as provisions when it is probable that the
Group will be required to settle the obligation under sales contracts. Returns provisions in existence at the balance sheet
date are expected to be utilised within 12 months, the provision is recalculated at each balance sheet date taking into
account recent sales and anticipated levels of returns.
Lease dilapidation
The Group recognises present obligations arising from lease contracts where it is required to restore leased properties to
their pre-lease condition upon the expiry of leases. Lease dilapidations provisions are expected to be utilised in the next
financial year.
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of
the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition.
Financial assets
Trade and other receivables
Trade and other receivables originated by the company are stated at amortised cost as reduced by appropriate allowances
for doubtful debts.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the statement of financial
position and include overdrafts where these are used on a day-to-day basis to manage cash.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-
term receivables when the recognition of interest would be immaterial.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into and are classified as either financial liabilities at ‘fair value through the income statement’ (“FVTPL”) or ‘other financial
liabilities’.
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at
FVTPL.
Other financial liabilities
Other financial liabilities, including loans payable, are initially measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at amortised cost.
Loans payable
Interest-bearing loans are initially recorded on the day that the loans are advanced at the net proceeds received.
At subsequent reporting dates, interest-bearing borrowings are measured at amortised cost. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on the accrual basis in the
statement of comprehensive income using the effective interest rate method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are stated at amortised cost.
Derivative financial instruments and cash flow hedges
The Group holds derivative financial instruments to hedge its foreign currency exposures. These derivatives, classified
as cash flow hedges, are initially recognised at fair value and then re-measured at fair value at the end of each reporting
date. Hedging instruments are documented at inception and effectiveness is tested throughout their duration. Changes
in the value of cash flow hedges are recognised in other comprehensive income and any ineffective portion is immediately
recognised in the statement of comprehensive income. If the firm commitment or forecast transaction that is the subject of
a cash flow hedge results in the recognition of a non-financial asset or liability, then at the time the asset is recognised, the
associated gains or losses on the derivative that had been previously recognised on other comprehensive income are included
in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or liability,
amounts deferred in other comprehensive income are recognised in the statement of comprehensive income in the same
period in which the hedged item affects net profit.
74 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 75
Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant
date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the
fair value of equity-settled share-based transactions are set out in note 26.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At each balance sheet
date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-
market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the
fair value of the liability. At each balance sheet date until the liability is settled, and at the date of settlement, the fair value
of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.
Critical accounting judgements and key sources of estimation uncertainty
Drawing up the financial statements in accordance with IFRS requires management to make the necessary estimates and
assessments. Estimates are based on past experience and other reasonable assessment criteria. There remains a probability,
however, that the estimates and assessments will bring about an adjustment in the value of the assets and liabilities in the
next financial year.
In accordance of IAS 1 the Group is required to disclose critical accounting judgements and key source of estimation
uncertainty. The directors have assessed that the Group does not have any critical accounting judgements or key estimations
that have been used in assumptions that may have a material impact on the amounts of assets and liabilities recognised in
the financial statements.
Areas of non-key financial estimates that do not have a material impact on the financial statements are detailed below:
Impairment: Stores are identified for impairment testing primarily on the basis of current performance, with growth
assumptions based on directors’ knowledge and experience. The Directors have used forecast models and an appropriate pre-
tax weighted average cost of capital in its property, plant and equipment impairment calculations.
Inventory valuation: Inventory is carried in the financial statements at the lower of cost and net realisable value. Cost
includes product purchase price and associated inward transportation costs. Net realisable value is based on estimated
selling price less further costs incurred to disposal.
The Directors have used their knowledge and experience of the retail industry in determining the level and rates of
provisioning required to calculate the appropriate inventory carrying values. Sales in the retail industry vary with changes
in consumer demand. As a result, there is a risk that the cost of inventory exceeds its net realisable value. Management
calculate the inventory provision on the basis of the ageing profile of what is in stock. Adjustments are made where
appropriate based on directors’ knowledge and experience to calculate the appropriate inventory carrying values.
Returns provision: Accruals for sales refunds are based on recent historical returns and management’s best estimates and
are allocated to the period in which the revenue is recorded.
2. REVENUE
The revenue and profit before taxation are attributable to the one principal activity of the Group.
Sale of goods
52 W KS E N D E D
27 M AY 2018
£’000
52 W KS E N D E D
28 M AY 2017
£’000
185,933
185,933
157,032
157,032
3. SEGMENT REPORTING
The Group has three reportable segments; Retail, Wholesale and Other. For each of the three segments, the Group’s
chief operating decision maker (the “Board”) reviews internal management reports on a monthly basis. Each
segment can be summarised as follows:
• Retail: Retail includes sales and costs relevant to stores, e-commerce, shows and franchises.
• Wholesale: Wholesale includes sales and costs relevant to the sale of products to other
retail businesses or distributors for onward sale to their customer.
• Other: Other includes income from licencing, central costs and items that are not
distinguishable into the segments above.
The accounting policies of the reportable segments are the same as described in note 1. Information regarding the
results of each reportable segment is included below. Segment results before non-recurring costs, being underlying
earnings before interest, taxation, depreciation and amortisation, are used to measure performance as management
believes that such information is the most relevant in evaluating the performance of certain segments relative to
other entities that operate within these industries.
There are no discontinued operations in the period.
52 WEEKS ENDED 27 MAY 2018
REVENUE
Cost of sales
GROSS PROFIT
Administration expenses
SEGMENT RESULT
Reconciliation of segment result to profit before tax
SEGMENT RESULT
Depreciation and amortisation
Share based payments (incl NI)
Non-recurring costs
Finance costs
PROFIT BEFORE TAX
RETAIL
£’000
WHOLESALE
£’000
OTHER
£’000
TOTAL
£’000
129,680
55,528
725
185,933
(48,636)
(33,767)
-
(82,403)
81,044
21,761
725
103,530
(46,586)
(10,334)
(25,493)
(82,413)
34,458
11,427
(24,768)
21,117
34,458
11,427
(24,768)
21,117
(4,656)
(410)
(2,747)
(7,813)
(1,766)
-
(348)
11,190
76 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 77
3. SEGMENT REPORTING (continued)
4. INFORMATION REGARDING DIRECTORS AND EMPLOYEES (continued)
RETAIL
£’000
WHOLESALE
£’000
OTHER
£’000
TOTAL
£’000
111,884
44,749
399
157,032
Average number of employees (including Executive Directors) was:
52 WEEKS ENDED 28 MAY 2017
REVENUE
Cost of sales
GROSS PROFIT
Administration expenses
SEGMENT RESULT
Reconciliation of segment result to profit before tax
SEGMENT RESULT
Depreciation and amortisation
Share based payments (inc NI)
Non-recurring costs
Finance costs
PROFIT BEFORE TAX
Geographical information
(42,389)
(27,592)
-
(69,981)
69,495
17,157
399
87,051
(39,171)
(8,246)
(22,704)
(70,121)
30,324
8,911
(22,305)
16,930
30,324
(3,901)
8,911
(22,305)
16,930
(364)
(2,344)
(6,609)
(828)
(341)
(241)
8,911
The Group’s revenue from external customers by geographical location is as detailed below.
UK
£’000
INTERNATIONAL
£’000
TOTAL
£’000
52 weeks ended 27 May 2018
Revenue
Non-current assets
52 weeks ended 28 May 2017
Revenue
Non-current assets
4. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Staff costs during the period
Wages and salaries
Social security costs
Other pension costs
Equity-settled share-based payment charges (incl. NI)
185,933
32,239
157,032
21,874
161,499
31,361
139,030
21,654
24,434
878
18,002
220
52 WEEKS
ENDED 27
MAY 2018
£’000
30,260
2,731
351
1,595
34,937
Head office
Stores and Shows
Warehousing
Directors’ remuneration
The tables below detail the total remuneration earned by each Executive Director:
N U M B E R
N U M B E R
452
1,169
144
1,765
52 W E E KS E N D E D
27 M AY 2018
Executive Directors
SALARIES/
FEES
£’000
TAXABLE
BENEFITS
£’000
21.1
22.6
14.7
-
-
-
PENSION
£’000
16.8
17.3
16.2
-
-
-
CASH
BONUS
£’000
BONUS DEFERRED
INTO SHARES
£000
TOTAL
REMUNERATION
£000
166.7
171.6
126.8
-
-
-
166.7
171.6
257.5
-
-
-
706.2
728.1
672.7
85.0
50.0
55.0
335.0
345.0
257.5
85.0
50.0
55.0
1,127.5
58.4
50.2
465.1
595.8
2,297.0
SALARIES/
FEES
£000
335.0
345.0
235.0
75.0
50.0
55.0
TAXABLE
BENEFITS
£000
35.5
22.6
12.0
-
-
-
PENSION
£000
16.8
17.3
11.8
-
-
-
CASH
BONUS
£000
BONUS DEFERRED
INTO SHARES
£000
TOTAL
REMUNERATION
£000
166.2
168.5
169.7
-
-
-
166.2
168.6
169.8
-
-
-
719.6
722.0
598.3
75.0
50.0
55.0
1,095.0
70.1
45.9
504.5
504.5
2,219.9
T S L Joule
C N Porter
M S Dench
Non-Executive Directors
N W McCausland
J C Little
D A Stead
TOTAL
52 WEEKS ENDED
28 MAY 2017
Executive Directors
T S L Joule
C N Porter
M S Dench
Non-Executive Directors
N W McCausland
J C Little
D A Stead
TOTAL
The number of Directors to whom retirement benefits have accrued during the period was 3 (2017: 3).
26,3212,48523273729,77552 WEEKSENDED 28MAY 2017£’0004161,0101201,546
78 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 79
5. PROFIT FOR THE YEAR
Profit (before tax) is stated after charging:
Cost of inventories recognised as expense
Staff costs (see note 4)
Property, rent and service charges
Transportation, carriage and packaging
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment loss recognised on trade receivables
Net foreign exchange gains
Write down of inventory in the period
Other expenses
TOTAL
52 W KS E N D E D
27 M AY 2018
£’000
52 W KS E N D E D
28 M AY 2017
£’000
69,794
34,937
13,534
10,110
6,360
1,453
-
(796)
150
38,853
174,395
61,851
29,775
11,658
8,354
4,920
1,688
240
(247)
126
29,515
147,880
Other expenses include non-recurring items of £nil for 52 weeks to 28 May 2018 (2017: £341,000) which have been disclosed
separately on the face of the income statement in order to summarise the underlying results. The non-recurring costs in
the prior period of £341,000 relate to IPO transaction costs. Neither ‘underlying profit or loss’ nor ‘non-recurring items’ are
defined by IFRS, however, the Directors believe that the disclosures presented in this manner provide a clear presentation
of the financial performance of the Group. Amortisation of intangible assets is included within administrative expenses in
the income statement.
Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Audit of these financial statements
Audit of financial statements of subsidiaries of the Company
TOTAL AUDIT FEES
Other services pursuant to legislation:
Tax compliance
Tax advice
Audit related assurance services
Remuneration and share plan advisory
Other services
TOTAL NON-AUDIT FEES
52WKS ENDED
27 MAY 2018
£’000
52WKS ENDED
28 MAY 2017
£’000
8
90
98
2
13
4
22
5
46
6
74
80
27
32
13
54
-
126
6. FINANCE COSTS
Bank loan interest
Term loan interest
Finance lease interest
7. INCOME TAX
a) Analysis of charge in the period
Current tax
UK corporation tax based on the profit for the period
Adjustment in respect of prior periods
Overseas tax
TOTAL CURRENT TAX CHARGE
Deferred taxation (note 17)
Adjustment in respect of prior periods
Deferred tax on share based payments
Movement in fixed asset timing differences
Movement on disallowable provision
Effect of adjustment in tax rate
TOTAL DEFERRED TAXATION CHARGE
TAX CHARGE FOR THE PERIOD (NOTE 7B)
52WKS ENDED
27 MAY 2018
£’000
52WKS ENDED
28 MAY 2017
£’000
254
56
38
348
176
-
65
241
52WKS ENDED
27 MAY 2018
£’000
52WKS ENDED
28 MAY 2017
£’000
3,090
(39)
17
3,068
(148)
(290)
(89)
23
-
(504)
2,564
2,563
(347)
21
2,237
366
(113)
(50)
113
15
331
2,568
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised in
other comprehensive income.
Deferred taxation (note 17)
Gains arising during the period on deferred tax on cash flow hedges
TOTAL INCOME TAX GAIN RECOGNISED IN OTHER COMPREHENSIVE INCOME
31
31
112
112
52WKS ENDED
27 MAY 2018
£’000
52WKS ENDED
28 MAY 2017
£’000
80 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 81
7. INCOME TAX (CONTINUED)
b) Factors affecting the tax charge for the period
There are reconciling items between the expected tax charge and the actual
which are shown below:
PROFIT BEFORE TAXATION
UK corporation tax at the standard rate
Profit multiplied by the standard rate in the UK
Effects of:
Expenses not deductible for tax purposes and other permanent differences
IPO expenses not deductible for tax purposes
Depreciation and amortisation on non-qualifying assets
Difference in overseas tax rate
Effect of adjustment in tax rate
Adjustment in respect of prior period (current tax)
Adjustment in respect of prior period (deferred tax)
TAX EXPENSE FOR THE PERIOD (NOTE 7A)
52WKS ENDED
27 MAY 2018
£’000
52WKS ENDED
28 MAY 2017
£’000
11,190
19.0%
2,126
216
-
347
17
45
(39)
(148)
2,564
8,911
19.8%
1,767
399
60
287
21
15
(347)
366
2,568
The Finance Act 2015 included provisions to reduce the rate of UK corporation tax to 19% with effect from 1 April 2017. The
Finance Act 2016 included provisions to further reduce the rate of UK corporation tax to 17% with effect from 1 April 2020.
Deferred taxation is measured at tax rates that are expected to apply in the periods in which temporary timing differences
are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at the balance sheet
date. Accordingly the rate used to calculate deferred tax assets and liabilities is the effective rate at the date the deferred
tax is expected to be realised.
The UK corporation tax at the standard rate for the year is therefore 19.0% (2017: 19.8%).
8. PROPERTY, PLANT AND EQUIPMENT
Cost
At 29 May 2016
Additions
Disposals
At 28 May 2017
Additions
Disposals
Transfers
At 27 May 2018
Accumulated depreciation
At 29 May 2016
Charges for the period
Disposals
At 28 May 2017
Charges for the period
Disposals
Transfers
At 27 May 2018
Net book value
At 29 May 2016
At 28 May 2017
At 27 May 2018
LAND &
BUILDINGS
£’000
LEASEHOLD
IMPROVEMENTS
£’000
FIXTURES &
FIT TINGS
£’000
MOTOR
VEHICLES
£’000
-
-
-
-
4,715
-
-
4,715
-
-
-
-
-
-
-
-
-
-
4,715
100
-
-
100
-
(100)
-
-
-
69
8
77
23
(100)
-
-
-
31
23
22,780
5,415
-
28,195
8,437
(7,233)
(1,318)
28,081
11,675
4,906
-
16,581
6,331
(7,233)
(929)
14,750
11,105
11,614
13,331
126
-
-
126
-
(33)
-
93
111
6
-
117
6
(33)
-
90
15
9
3
TOTAL
£’000
23,006
5,415
-
28,421
13,152
(7,366)
(1,318)
32,889
11,855
4,920
-
16,775
6,360
(7,366)
(929)
14,840
11,151
11,646
18,049
Property, Plant and Equipment
During the period the Directors conducted a detailed review of the Group’s fixed assets. As a result of this review £7,366,000
of Leasehold Improvements, Fixtures and Fittings and Motor Vehicles of nil book value items which were no longer in
existence or in use as at the balance sheet date were identified, these were recorded as a disposal in the period.
Transfers in the Period relate to capital expenditure with regard to the new ERP System which was previously recorded
within Plant, Property and Equipment being reclassified to Intangible Assets - IT Systems expenditure.
Land & Buildings additions relates to the acquisition of the freehold interest in the site intended for use as the Group’s new
head office following a period of refurbishment. The Term loan detailed in note 15 is secured against the Land & Buildings.
9. INTANGIBLE ASSETS
Cost
At 29 May 2016
Additions
Disposals
At 28 May 2017
Additions
Disposals
Transfers
At 27 May 2018
Accumulated amortisation
At 29 May 2016
Charges for the period
Disposals
Impairment
At 28 May 2017
Charges for the period
Disposals
Impairment
Transfers
At 27 May 2018
Net book value
At 29 May 2016
At 28 May 2017
At 27 May 2018
Intangible assets
IT SYSTEMS
£’000
7,753
5,284
-
13,037
4,179
(1,111)
1,318
17,423
1,850
1,688
-
-
3,538
1,453
(1,111)
-
929
4,809
5,903
9,499
12,614
TOTAL
£’000
7,753
5,284
-
13,037
4,179
(1,111)
1,318
17,423
1,850
1,688
-
-
3,538
1,453
(1,111)
-
929
4,809
5,903
9,499
12,614
During the period the Directors conducted a detailed review of the Group’s intangible fixed assets. As a result of this review
£1,111,000 of nil book value items which were no longer in existence or in use as at the balance sheet date were identified,
these were recorded as a disposal in the period.
Transfers in the Period relate to capital expenditure with regard to the new ERP System which was previously recorded
within Plant, Property and Equipment being reclassified to Intangible Assets - IT Systems expenditure.
82 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 83
10. INVENTORIES
Goods for resale
Goods in transit
27 M AY 2018
£’000
28 M AY 2017
£’000
22,441
10,354
32,795
18,768
2,426
21,194
The cost of inventories recognised as an expense during the year in respect of continuing operations in the 52 weeks ended
27 May 2018 was £69,794,000 (2017: £61,851,000).
During the Period, the cost of inventories recognised as an expense includes £138,000 (2017: £39,000) of stock previously
provided for which was sold and the provision was therefore released. The cost of inventories recognised as an expense
excludes £150,000 for the 52 weeks ended 27 May 2018 (2017: £126,000) in respect of write-downs of inventory to net
realisable value.
Product is purchased on a seasonal basis with the intention of selling that stock within 12 months of the balance sheet date.
Any aged stock is appropriately provided for.
11. DERIVATIVE FINANICAL INSTRUMENTS
Forward contracts and options
The Group enters into forward foreign exchange contracts and options to manage the risk associated with anticipated sale
and purchase transactions which are denominated in foreign currencies.
As at 27 May 2018, the Group has 135 (2017: 136) forward foreign exchange contracts outstanding. Derivative financial
instruments are carried at fair value, further detailed on note 23.
The following table details the USD foreign currency contracts outstanding as at the balance sheet date.
OUTSTANDING
CONTACTS
Buy U.S. Dollars
Less than 3 months
3 to 6 months
6 months and above
AV E R AG E
E XC H A N G E R AT E
2018
£/$
2017
£/$
F O R E I G N C U R R E N C Y
N O T I O N A L VA L U E
FA I R VA L U E
2018
$’ 000
2017
$’ 000
2018
£0 00
2017
£0 00
2018
£0 00
2017
£000
1.2733
1.3049
1.3820
1.3416
1.3125
1.2819
1.2734
25,150
25,500
19,752
18,985
29,050
13,500
22,263
10,485
(894)
(572)
920
24
74,050
90,700
53,581
71,225
1,124
(1,101)
1.2822
128,250
129,700
95,596
100,695
(342)
(157)
The Company does not hold Euro to GBP forward options (2017: nil). The US Dollar spot rate at 27 May 2018 was $1.3311/
£1. The fair value of cash flow hedges of the Group as at 27 May 2018 was an asset of £1,338,000 (2017: £1,345,000) and a
liability of £1,680,000 (2017: £1,502,000) resulting in a net liability of £342,000 (2017: net liability £157,000), further detailed
in note 23.
12. TRADE AND OTHER RECEIVABLES
Trade receivables – gross
Allowance for doubtful debts
Trade receivables – net
Other receivables
Prepayments
27 MAY 2018
£’000
28 MAY 2017
£’000
6,730
(592)
6,138
582
9,736
2,852
(405)
2,447
1,984
9,582
TOTAL TRADE AND OTHER RECEIVABLES
16,456
14,013
Movement in the allowance for doubtful debts
Balance at beginning of period
Bad debt write off
Movement in doubtful debt estimate
BALANCE AT END OF PERIOD
27 MAY 2018
£’000
28 MAY 2017
£’000
(405)
62
(249)
(592)
(165)
80
(320)
(405)
Ageing of past due trade receivables
Not yet due
0-30 days overdue
31-60 days overdue
>60 days overdue
Total trade receivables
G R O SS
£’0 00
P R OV I S I O N
£’0 00
27 MAY 2018
N E T
£’0 00
3,606
1,847
600
677
6,730
-
(34)
(156)
(402)
(592)
3,606
1,813
444
275
6,138
All of the Other receivables and Prepayment balances above are deemed to be current; the disclosures above relate only to
the trade receivables balance. The Group’s doubtful debt policy is to provide for all balances deemed non recoverable. The
Directors review the recoverability of trade receivables on a regular basis and calculate the allowance for doubtful debts on
a specific, customer by customer basis.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties
and customers. Accordingly, the Directors believe that there is no further credit provision risk required in excess of the
allowance for doubtful debts.
Included within the Group’s trade receivables (gross) balance are debtors with a carrying value of £2,532,000 (2017:
£873,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant
change in credit quality and the amounts are still considered recoverable.
28 MAY 20171,5746292833662,852GROSS£’0001,5745391142202,447NET£’000 -(90)(169)(146)(405)PROVISION£’000 84 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 85
13. TRADE AND OTHER PAYABLES
15. BORROWINGS (continued)
Trade payables
Other taxation and social security
Other payables
Accruals
27 MAY 2018
£’000
20,267
1,926
1,980
15,835
40,008
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
The Directors consider that the fair value of trade and other payables is not materially different from the carrying value.
14. PROVISIONS
Returns provision
Dilapidations
At 28 May 2017
Additional provision during the period
Utilisation of provision
At 27 May 2018
15. BORROWINGS
Summary of borrowing arrangements
27 MAY 2018
£’000
28 MAY 2017
£’000
767
264
1,031
D I L A P I DAT I O N S
£’ 000
RETURNS
PROVISION
£’000
231
141
(108)
264
405
569
(207)
767
405
231
636
TOTAL
£’000
636
710
(315)
1,031
The Bank loan is a £25 million Revolving Credit Facility in which amounts drawn down are generally repayable within three
months. The facility matures in July 2021 following an amendment and extension that was completed in July 2017.
The Term loan is a £3.5 million 5 year loan facility arranged with Barclays Bank PLC, secured against the new head office
land and buildings asset.
The Finance leases are secured against the assets to which they relate. the present value of minimum lease payments is
equal to the liability. Interest is paid at varying rates above base rate
The weighted average interest rates paid during the period were as follows:
Finance leases
Term loan
Bank loan
52 W KS E N D E D
27 M AY 2018
%
52 W KS E N D E D
28 M AY 2 017
%
7.3
1.8
2.0
7.7
-
2.1
Bank loan
Term loan
Finance leases
Borrowings are repayable as follow:
Bank loan
Within one year
Term Loan
Within one year
Between one and two years
Between two and five years
Finance leases
Within one year
Between one and two years
Between two and five years
Total borrowings
Within one year
Between one and two years
Between two and five years
27 MAY 2018
£’000
5,000
3,237
294
8,531
5,000
350
350
2,537
3,237
209
85
-
294
5,559
435
2,537
8,531
-
-
627
627
-
-
-
-
-
333
210
84
627
333
210
84
627
28 MAY 2017£’00014,0741,9311,88814,36332,25628 MAY 2017£’000 86 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 87
16. FINANCIAL COMMITMENTS
Operating lease commitments
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:
18. CALLED UP SHARE CAPITAL
Allotted and issued
27 MAY 2018
£’000
28 MAY 2017
£’000
87,503,058 Ordinary shares of £0.01 each (2017: 87,500,690)
875
875
27 MAY 2018
£’000
28 MAY 2017
£’000
Authorised
116,667,736 Ordinary shares of £0.01 each (2017: 116,666,394)
1,167
1,167
L A N D & B U I L D I N G S
Lease payments:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
O T H E R
Leases payments:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
11,107
34,818
18,929
64,854
10,394
34,669
20,061
65,124
27 MAY 2018
£’000
28 MAY 2017
£’000
742
1,566
105
2,413
483
772
151
1,406
During the Period 2,368 new ordinary shares were issued in relation to the SAYE scheme to employees that left the business
during the Period.
19. OTHER RESERVES
Merger reserve
The Company was incorporated on 1 May 2016. The acquisition of Joules Investments Holdings Limited by Joules Group
plc on 26 May 2016 has been accounted for using reverse acquisition accounting principles. As a result, a merger reserve of
£125,807,000 was created upon acquisition and AIM listing of the Group on 26 May 2016.
Retained earnings
The movement on retained earnings is as set out in the consolidated statement of changes in equity. Retained earnings
represent cumulative profits or losses, net of dividends and other adjustments.
Share premium
The share premium reserve contains the premium arising on the issue of equity shares, net of issue expenses incurred by the
company. On 26 May 2016 in an initial public offering Joules Group plc issued 7,175,851 ordinary £0.01 shares at a price of
£1.60, resulting in share premium of £11,409,603.
17. DEFERRED TAXATION
The following is the analysis of deferred tax assets/(liabilities) presented in the consolidated statement of financial position:
27 MAY 2018
£’000
28 MAY 2017
£’000
Balance at 28 May 2017
Balance at 27 May 2018
Difference between depreciation and capital allowances
Balance brought forward
Credit/(Charge) to income statement
BALANCE AT END OF PERIOD
Other short term timing differences
Balance brought forward
Credit to income statement
Credit due to cash flow hedges
Credit due to share options
BALANCE AT END OF PERIOD
TOTAL DEFERRED TAX ASSET AT END OF PERIOD
Movement
Balance brought forward
Credit/(Charge) to income statement (note 7)
Credit to other comprehensive income (note 7)
BALANCE AT END OF PERIOD
260
356
616
351
148
31
-
532
1,148
612
504
31
1,148
704
(444)
260
(51)
113
112
177
351
612
653
(331)
289
612
There is no unprovided deferred tax in the current period for the Group (2017: £nil). The deferred tax asset recognised in the
current period is expected to be utilised against future taxable profits.
£’000
11,410
11,410
HEDGING
RESERVE
£’000
TRANSLATION
RESERVE
£’000
389
(640)
112
(139)
(277)
139
(277)
(72)
11
-
(61)
422
-
361
20. HEDGING AND TRANSLATION RESERVE
GROUP
BALANCE AS AT 29 MAY 2016
Other comprehensive income for the period
Losses arising during the period on deferred tax on cash flow hedges
BALANCE AS AT 28 MAY 2017
Other comprehensive income for the period
Basis adjustment to hedged inventory
BALANCE AS AT 27 MAY 2018
Hedging reserve
The reserve represents the cumulative gains and losses on hedging instruments in cash flow hedges. The cumulative
deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedge transaction impacts the
profit or loss or is included as a basis adjustment to the non-financial hedged item, consistent with the applicable accounting
policy.
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign operations which relate to
subsidiaries only, from their functional currency into the Group’s presentational currency being Sterling, are recognised
directly to the translation reserve.
88 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 89
21. CASH AND CASH EQUIVALENTS
Cash and cash at bank
22. ANALYSIS OF NET CASH/(DEBT)
Cash at bank and in hand
Bank loan
Term loan
Finance leases
TOTAL LIABILITIES FROM FINANCING ACTIVITIES
TOTAL
23. FINANCIAL INSTRUMENTS
FA I R VA L U E S
Categories of financial instruments
Carrying value of financial assets:
Cash and cash equivalents
Loans and receivables
Cash flow hedges
TOTAL FINANCIAL ASSETS
Financial liabilities held at amortised cost:
Trade payables
Other payables
Borrowings
Cash flow hedges
TOTAL FINANCIAL LIABILITIES
Interest rate sensitivity analysis
27 MAY 2018
£’000
8,571
NET CASH
FLOW
£’000
1,656
(5,000)
(3,150)
246
(7,904)
28 MAY 2017
£’000
NON-CASH
CHANGES
£000
6,964
(49)
-
-
(627)
(627)
6,337
-
-
-
-
(49)
(6,248)
27 MAY 2018
£’000
8,571
(5,000)
(3,150)
(381)
(8,531)
40
NOTE
27 MAY 2018
£’000
28 MAY 2017
£’000
21
12
11
13
13
15
11
8,571
16,456
25,027
1,338
26,365
6,964
14,013
20,977
1,345
22,322
(20,267)
(14,074)
(19,741)
(18,182)
(8,531)
(627)
(48,539)
(32,883)
(1,680)
(1,502)
(50,219)
(34,385)
If interest rates on all borrowings had been 1% higher/lower and all other variables were held constant, the Group’s
profit for the period ended 52 weeks to 27 May 2018 would decrease/increase by £70,000 (2017: £41,000). This has been
calculated by applying the amended interest rate to the weighted average rate of borrowings for the period to 27 May 2018
for borrowings at the period end, other than borrowings which are held at a fixed interest rate as those borrowings are not
sensitive to external variables, such as movement in interest rates.
Foreign currency sensitivity analysis
The Group is mainly exposed to fluctuations in the US $, which is used for stock purchases. If the US $ exchange rate, on
average through the period, weakened/strengthened by 10 percent and all other variables were held constant, the Group’s
profit for the period ended 52 weeks to 27 May 2018 would increase/decrease by £194,000 and £27,000 respectively (2017:
£82,000 and £101,000). This has been calculated by applying the amended currency rate to the US $ value of financial assets
and financial liabilities held at the period end, an amended rate has not been applied to US $ purchases in the period as
they have been effectively hedged against currency fluctuations via forward contracts.
Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its derivative and non-derivative financial
liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and
principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest
rate curves at the balance sheet date. The contractual maturity is based on the earliest date on which the Group may be
required to pay.
WEIGHTED AVERAGE
EFFECTIVE INTEREST
LESS THAN 1
1-3
3 MONTHS
RATE %
MONTH
MONTHS
TO 1 YEAR
1-5
YEARS
TOTAL
27 May 2018
Bank loans
Term loan
Finance leases
Trade payables
Accruals
NON-DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENT
28 May 2017
Bank loans
Term loan
Finance leases
Trade payables
Accruals
NON-DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENT
2.0
1.8
7.3
-
-
-
2.1
-
7.7
-
-
-
(11)
(92)
(22)
(21)
(10)
(44)
(5,032)
-
(5,064)
(308)
(160)
(3,072)
(3,482)
(87)
(313)
(10,010)
(5,159)
(5,099)
(8,004)
(6,403)
(1,428)
-
-
(20,268)
(15,835)
(18,139)
(11,637)
(12,027)
(3,159)
(44,962)
(9,500)
(29,650)
(68,350)
(24,000)
(131,500)
-
-
-
-
-
-
-
-
-
-
(32)
(64)
(276)
(313)
(685)
(7,077)
(4,426)
(2,571)
(7,900)
(5,027)
(1,437)
-
-
(14,074)
(14,363)
(15,009)
(9,517)
(4,283)
(313)
(29,122)
(8,000)
(9,000)
(75,450)
(37,250)
(129,700)
The Group has significant financial assets in inventory and trade debtors which are easily convertible to cash. In addition, the
above table includes derivative financial instruments where there would be cash inflows on maturity of the forward contract.
Carrying value of financial assets
The Directors have assessed that, on the basis of the net assets of the owing companies, receivables are fully recoverable.
A significant decrease in the net assets and trade of the owing company or a decline in the financial position of customers
would trigger an impairment review.
Credit risk
In the opinion of the Directors, the only financial instrument that is subject to credit risk is the trade receivables. The
Directors believe that the bad debt provision as disclosed in note 12 represents the Directors’ best estimate of the maximum
exposure to credit risk at period-end.
Fair value of financial instruments
Financial instruments are measured in accordance with the accounting policy set out in note 1. Foreign currency forward
contracts and options are considered Level 2. In the opinion of the Directors, the fair value of the financial assets and
liabilities are equal to their book values.
Liquidity risk management
The Directors believe that the receivables are not impaired and that the owing companies have sufficient net assets to repay
the balances. Therefore the Directors believe that liquidity risk is minimal.
Capital risk management
The Directors maintain detailed cash forecasts which are frequently revised to actuals to ensure that the Group has
sufficient liquid resources to meet its requirements.
28 MAY 2017£’0006,964 90 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS 91
Foreign currency financial assets and liabilities
Included within the above table are £13,822,000 (2017: £4,667,000) of assets and £4,072,000 (2017: £984,000) of liabilities
relating to the overseas subsidiaries which have been translated in the consolidation at the period-end rate. These balances
are subject to movements in exchange rates, as shown in the statement of changes in equity. The Directors do not believe
the risk is significant enough to warrant hedging against the investments in overseas companies.
Also included within the above table are foreign denominated external trade payables and receivables of £2,191,000 (2017:
£614,000) and £4,129,000 (2017: £1,114,000) respectively.
24. RELATED PARTY TRANSACTIONS
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation.
The Directors control 30,112,305 shares (2017: 31,171,782 shares) in Joules Group plc, which represents 34.4% (2017: 35.6%)
of the issued share capital.
The remuneration of the Directors of the Group is disclosed in note 4 and the Directors’ Remuneration Report. In addition
Directors participate in dividend payments and share schemes, further details of which can be found in note 27 and 26
respectively.
25. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing profit attributable to ordinary equity holders by the
weighted average number of ordinary shares in issue during the period.
For the calculation of diluted earnings per share, the weighted average number of shares in issue is further adjusted
to assume conversion of all potentially dilutive ordinary shares. The Company has one category of potentially dilutive
ordinary shares, being management shares not yet vested.
Basic earnings per share (pence)
Diluted earnings per share (pence)
The calculation of basic and diluted earnings per share is based on the following data:
Earnings
Earnings for the purpose of basic and diluted earnings per share
Number of shares
Weighted number of ordinary shares for the purpose of basic earnings per share
Potentially dilutive share awards
52 WEEKS
ENDED 27 MAY
2018
9.86
9.74
8,626
87,503,058
1,014,761
Weighted number of ordinary shares for the purpose of diluted earnings per share
88,517,819
26. SHARE BASED PAYMENTS
Summary of movement in awards:
Number of shares
DBP
ESOP
LTIP
SAYE
TOTAL
Outstanding at 28 May 2017
132,132
582,907
1,896,938
339,753
2,951,730
Granted during the year
Lapsed during the year
Exercised during the year
158,587
-
-
-
-
-
900,303
373,987
1,432,877
(544,147)
(64,928)
(609,075)
-
(2,368)
(2,368)
Outstanding at 27 May 2018
290,719
582,907
2,253,094
646,444
3,773,164
Exercisable at 27 May 2018
-
582,907
-
-
582,907
All share options were valued using the Black-Scholes model. Expected volatility was determined by management, using
comparator volatility as a basis. The expected life of the options was determined based on management’s best estimate.
The expected dividend yield was based on the anticipated dividend policy of the Company over the expected life of the
options. The risk free rate of return input into the model was a zero coupon government bond with a life in line with the
expected life of the options.
The fair value of the total shares issued during the period, and measured as at issue date is £3,874,000.
The inputs into the model were as follows:
Weighted average share price
Weighted average exercise price
No. of employees
Shares under option
Expected volatility
Expected life (Years)
Risk-free rate
Possibility of ceasing employment before vesting
Expectations of meeting performance criteria
Expected dividend yields
DBP
2.84
0.01
1
ESOP
2.51
1.62
10
LTIP
2.76
0.01
86
SAYE
2.87
1.82
222
290,719
582,907
2,253,094
646,444
28.0%
28.0%
28.0%
28.0%
3
3-10
3
0.08%
0.06%
0.08%
0%
100%
1.9%
0%
0%-10%
100%
60%-100%
1.9%
1.9%
3
0.08%
10%
100%
1.9%
The Group recognised a net expense of £1,595,000 during the year (2017: £737,000) relating to equity settled share-
based payments. Including associated employer’s National Insurance contributions of £171,000 (2017: £92,000) the Group
recognised a total expense of £1,766,000 during the year (2017: £829,000).
Deferred Bonus Plan (“DBP”)
The DBP operates in conjunction with the Group’s annual bonus plan. The number of ordinary shares subject to a DBP
award will be such number of shares as has a market value equal to the value of the annual bonus deferred into a DBP
award. DBP awards take the form of nil-cost options, vest on the third anniversary of the date on which the relevant annual
bonus was determined and are normally exercisable until the tenth anniversary of the grant date.
Executive Share Option Plan (“ESOP”)
The Group operated a share option scheme during the period for certain employees under the Executive Share Option Plan
(“ESOP”). The different options vest between two years and three years and have an exercise life between three and ten
years from grant date. All option schemes are subject to continued employment over the vesting period.
52 WEEKS ENDED 28 MAY 20177.257.226,34387,500,690294,29587,794,985 92 N OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L STAT E M E N TS
Long Term Incentive Plan (“LTIP”)
The Board approved Long Term Incentive Plan 2016 (“LTIP 2016”) allows the grant of options to executive directors and
senior management of the Group in the form of nil-cost options over ordinary shares in Joules Group plc. The options are
exercisable three years after the date of grant subject to achieving certain stretching targets. For the Executive directors
and members of the operating board, the target is based on an EPS target in the final year of the relevant performance
period, being the financial years ending May 2019 and May 2020 for grants made to date. For other senior management
awards the target is based on the cumulative PBT over the three years to May 2019 and May 2020 for the grants made to
date. The calculation includes an assumption that 10% of senior managers on the scheme would cease employment before
vesting.
Save As You Earn Scheme (“SAYE”)
Under the terms of the SAYE scheme, the Board grants options to purchase ordinary shares in the Company to employees
who enter into the HMRC-approved SAYE scheme for a term of three years. Options are granted at up to 20% discount to
the market price of the shares on the day proceeding the date of offer and are exercisable for a period of six months after
completion of the SAYE contract.
27. DIVIDENDS
Interim dividend paid in the financial year
Approved dividend paid after the financial year
Final dividend proposed, not accrued, payable subject to approval at AGM
TOTAL
27 MAY 2018
28 MAY 2017
PENCE PER
SHARE
0.7
1.3
2.0
£’000
612
1,138
1,750
PENCE PER
SHARE
0.6
1.2
£’000
525
1,050
1.8
1,575
The Directors are proposing a final dividend of 1.30 pence per share with a total value of £1,137,540 (2017: 1.20 pence
per share with a total value of £1,050,008). This dividend has not been accrued in the consolidated statement of financial
position and will be put for approval at the AGM on 27 September 2018.
94 C O M PA N Y B A L A N C E S H E E T
C O M PA N Y STAT E M E N T O F C H A N G E S I N E Q U I T Y 95
C O M PA N Y B A L A N C E S H E E T
J O U L E S G R O U P P LC
C O M PA N Y STAT E M E N T O F C H A N G E S I N E Q U I T Y
J O U L E S G R O U P P LC
Balance at 29 May 2016
Dividend paid
Loss for the year and total comprehensive income
Balance at 28 May 2017
Dividend paid
Loss for the year and total comprehensive income
Balance at 27 May 2018
NOTE
34
34
SHARE
CAPITAL
£’000
SHARE
PREMIUM
£’000
RETAINED
EARNINGS
£’000
TOTAL
EQUITY
£’000
875
11,410
127,696
139,981
-
-
-
-
(525)
(366)
(525)
(366)
875
11,410
126,805
139,090
-
-
-
-
(1,663)
(1,663)
(574)
(574)
875
11,410
124,568
136,853
NON-CURRENT ASSETS
Investments
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Other debtors
Cash at bank and in hand
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Other payables
NET CURRENT LIABILITIES
TOTAL ASSETS LESS CURRENT LIABILITIES
CAPITAL AND RESERVES
Called up share capital
Share premium
Loss for the period
Profit and loss account
SHAREHOLDERS’ FUNDS
27 MAY 2018
28 MAY 2017
N O T E
£’000
£’000
29
30
31
32
33
139,980
139,980
139,980
139,980
20
-
20
5
11
16
140,000
139,996
3,147
3,127
906
890
136,853
139,090
875
11,410
(574)
125,142
136,853
875
11,410
(366)
127,171
139,090
The parent company loss for the period was £(574,000), (2017: loss of £(366,000)).
These financial statements of Joules Group plc (Company Registration Number 10164829) were approved by the
Board of Directors and authorised for issue on 24 July 2018 and were signed on behalf of the Board of Directors by –
MARC DENCH
Chief Financial Officer
24 July 2018
96 N OT E S TO T H E C O M PA N Y F I N A N C I A L STAT E M E N TS
N OT E S TO T H E C O M PA N Y F I N A N C I A L STAT E M E N TS 97
N OT E S TO T H E C O M PA N Y F I N A N C I A L STAT E M E N TS
J O U L E S G R O U P P LC
28. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
29. INVESTMENTS
Cost and Net Book Value
At 28 May 2017
At 27 May 2018
£’000
139,980
139,980
The Company was incorporated on 1 May 2016, the first period of account was therefore the 29 days ending 29 May 2016.
These separate financial statements of Joules Group plc were prepared in accordance with Financial Reporting Standard
101, Reduced Disclosure Framework (FRS 101).
On 26 May 2016 Joules Group plc acquired the entire share capital of Joules Investments Holdings Limited.
The Company’s subsidiaries, as at the period end are shown in the table below. All subsidiaries have been in existence
The Company’s financial statements are presented in GBP.
for the whole of the reporting period.
Subsidiaries
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in
relation to:
As at the period-end the Group has the following subsidiaries, those marked with * being indirect holdings:
• share based payments;
• financial instruments;
• capital management;
• presentation of comparative information in respect of certain assets;
• presentation of a cashflow statements;
• standards not year effective and;
• certain related parties transactions;
• business combinations;
As permitted by section 408 of the Companies Act 2006, the profit and loss account is not presented. The loss for the year
amounted to £(574,000), (2017: loss of £(366,000)).
Director remuneration for the period was £185,000 (2017: £180,000) in relation to Non-Executive Directors, further detailed
in note 4.
Auditor remuneration for the period was £144,000 (2017: £206,000), further detailed in note 5.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted
are the same as those set out in note 1 to the consolidated financial statements except as set out below.
Investments
Fixed asset investments are stated at cost less provisions for diminution in value.
Going Concern
Going concern for the Company has been considered along with the Group by the Directors. The consideration is set out in
note 1 of the consolidated financial statements.
Critical accounting judgements and key sources of estimation uncertainty
There were no critical accounting judgements that would have a significant effect on the amounts recognised in the parent
company financial statements or key sources of estimation uncertainty at the balance sheet date would have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year.
SUBSIDIARY NAME
NATURE OF BUSINESS
PLACE OF
INCORPORATION
AND OPERATION
REGISTERED ADDRESS
PROPORTION
OF OWNERSHIP
INTEREST
PROPORTION
OF VOTING
POWER HELD
Joules Investments
Holding company
England and
Joules Building, 16 The Point, Rockingham
100%
100%
Holdings Limited
Wales
Road, Market Harborough, LE16 7QU
Joules Limited*
Retailer
England and
Joules Building, 16 The Point, Rockingham
100%
100%
Wales
Road, Market Harborough, LE16 7QU
Joules Hong Kong
Overseas trading
Hong Kong
18/F, United Centre, 95 Queensway,
100%
100%
Limited*
entity
Admiralty, Hong Kong
Joules Clothing Shanghai
Overseas office
China
Room 1401-1404, No.432 West Huaihai
100%
100%
Company Limited*
Road, Changning district, Shanghai, China
Joules USA Inc.*
Overseas trading
USA
103 Foulk Road, Suite 202,
100%
100%
entity
Wilmington, DE19803, USA
Joules Developments
Non trading
England and
Joules Buildings, The Point, Rockingham
100%
100%
Limited*
Joules Property
Limited*
entity
Wales
Road, Market Harborough, LE16 7QU
Non trading
England and
Joules Buildings, The Point, Rockingham
100%
100%
entity
Wales
Road, Market Harborough, LE16 7QU
On 12 March 2018, the Group incorporated two new entities Joules Developments Limited and Joules Property Limited.
30. OTHER DEBTORS
Prepayments
27 MAY 2018
£’000
28 MAY 2017
£’000
20
20
5
5
98 N OT E S TO T H E C O M PA N Y F I N A N C I A L STAT E M E N TS
C O M PA N Y I N F O R M AT I O N 99
31. OTHER PAYABLES
Trade payables
Payables due to subsidiary
Taxation and social security
Accruals
C O M PA N Y I N F O R M AT I O N
J O U L E S G R O U P P LC
27 MAY 2018
£’000
28 MAY 2017
£’000
34
3,102
-
11
3,147
11
862
5
28
906
The payables due to subsidiary is in relation to administrative expenses and dividends paid by Joules Limited on behalf of
Joules Group plc. The terms of the intercompany payable is at nil interest, payable on demand.
32. CALLED UP SHARE CAPITAL
Allotted and issued
27 MAY 2018
£’000
28 MAY 2017
£’000
87,503,058 Ordinary shares of £0.01 each (2017: 87,500,690)
875
875
Authorised
116,667,736 Ordinary shares of £0.01 each (2017: 116,666,394)
1,167
1,167
During the Period 2,368 new ordinary shares were issued in relation to the SAYE scheme to employees that left the business
during the Period.
The company was incorporated on 1 May 2016. The acquisition of Joules Investments Holdings Limited by Joules Group plc
on 26 May 2016 has been accounted for using reverse acquisition accounting principles. As a result, a merger reserve of
£125,807,000 was created upon acquisition and AIM listing of the Group on 26 May 2016.
All ordinary shares carry equal rights.
33. SHARE PREMIUM
The share premium reserve contains the premium arising on the issue of equity shares, net of issue expenses incurred by the
company. On 26 May 2016 in an initial public offering Joules Group plc issued 7,175,851 ordinary £0.01 shares at a price of
£1.60, resulting in share premium of £11,409,603.
Balance at 28 May 2017
Balance at 27 May 2018
£’000
11,410
11,410
34. DIVIDEND
Details of the Dividend paid is shown in note 27 of the consolidated financial statements.
35. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the disclosure exemptions as permitted by FRS101 with regard to related party
transactions with wholly owned fellow group companies. Related party transactions (including Directors) are shown in note 24
of the Consolidated Financial Statements.
JOULES GROUP PLC
NOMINATED ADVISER & BROKER
Registered in England and Wales number: 10164829
Peel Hunt LLP, Moor House,
COMPANY SECRETARY
Jonathan William Dargie
REGISTERED OFFICE
Joules Building, The Point,
Rockingham Road, Market Harborough,
Leicestershire, LE16 7QU
WEBSITE
www.joulesgroup.com
120 London Wall,
London, EC2Y 5ET
BROKER
Liberum Capital Limited
Ropemaker Place, Level 12,
25 Ropemaker Street,
London, EC2Y 9LY
CORPORATE PR
Hudson Sandler
25 Charterhouse Square,
London, EC1M 6AE
LEGAL ADVISORS TO THE COMPANY
Eversheds LLP,
115 Colmore Row,
Birmingham, B3 3AL
AUDITOR
Deloitte LLP,
1 Woodborough Road,
Nottingham, NG1 3FG
REGISTRARS
Equiniti Limited, Aspect House,
Spencer Road,
Lancing, BN99 6DA